Annual report
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INTERNAL May 9, 2025 National Stock Exchange of India Limited Exchange Plaza, Plot No. C/1, G Block, Bandra - Kurla Complex, Bandra (East), Mumbai - 400 051. BSE Limited Corporate Relations Department, 1st Floor, New Trading Ring, P. J. Towers, Dalal Street, Mumbai - 400 001. Symbol: LTF Security Code No.: 533519 Kind Attn: Head - Listing Department / Dept. of Corporate Communications Sub: Submission of the Integrated Annual Report for the financial year 2024-25 and Notice of the Annual General Meeting Dear Sir / Madam, Pursuant to the requirements of Regulation 34 and 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other applicable regulations , please find enclosed the Integrated Annual Report of the Company for the financial year 2024-25 (“the Report”) along with the Notice of the Seventeenth Annual General Meeting (“Notice”) of the Company to be held on Tuesday, Ju ne 03, 2025 at 10.30 a.m. (IST) through electronic mode (video conference or other audio-visual means). In accordance with the circulars issued by the Ministry of Corporate Affairs and SEBI, the Report along with the Notice is sent through electronic mode to the Members and debenture holders of the Company. Further, the aforesaid Report along with the Notice has also been uploaded on the website of the Company at www.ltfinance.com/investors. We request you to take the aforesaid on record. For L&T Finance Limited (formerly known as L&T Finance Holdings Limited) Apurva Rathod Company Secretary and Compliance Officer Encl: as above
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Integrated Annual Report 2024-25
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Corporate Information Board of Directors S. N. Subrahmanyan Chairman and Non-Executive Director Sudipta Roy Managing Director and Chief Executive Officer R. Shankar Raman Non-Executive Director Thomas Mathew T. Independent Director Rajani R. Gupte Independent Director R. Seetharaman Independent Director Nishi Vasudeva Independent Director Company Secretary Apurva Rathod Joint Statutory Auditors M/s T R Chadha & Co LLP M/s Brahmayya & Co Registered Office and Investor Service Centre Brindavan, Plot No.177, C.S.T. Road, Kalina, Santacruz (East), Mumbai - 400098, Maharashtra, India Phone: +91 22 6212 5000 Fax: +91 22 6212 5553 Website: www.ltfinance.com Email: igrc@ltfs.com Registrar and Share Transfer Agents MUFG Intime India Private Limited (formerly known as Link Intime India Private Limited) C-101, 247 Park, L.B.S. Marg, Vikhroli (West), Mumbai - 400083, Maharashtra, India Phone: +91 810 811 6767 Fax: +91 22 4918 6060 Website: in.mpms.mufg.com Email: rnt.helpdesk@in.mpms.mufg.com Across the Pages About the Report How to Navigate this Report 2 4 About Your Company 8 Who We Are 08 Performance Highlights 10 Chairman’s Message 18 MD & CEO’s Message 22 Corporate Governance 28
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Value Creation Statutory Reports 118 316 Management Discussion and Analysis Notice Glossary Investor Information 78 674 700 Capitals 188 Value Creation Model 118 ESG@LTF 122 Stakeholder Engagement 148 Materiality Assessment 152 Business Responsibility and Sustainability Reporting 316 Assurance Statement 363 GRI Index 367 Financial Statements 431 Standalone 431 Consolidated 579 Financial Capital 188 Manufactured and Intellectual Capital 202 Human Capital 222 Social and Relationship Capital 260 Natural Capital 294 TCFD Disclosure 374 Policy Compendium 377 Board’s Report 378 Corporate Governance Report 406 Market Capitalisation (March 31, 2025) ₹ 38,226.37 Cr BSE Code 533519 NSE Symbol LTF AGM Day, Date and Time Tuesday, June 3, 2025 at 10:30 a.m. (IST) AGM Mode Video-Conference/Other Audio- Visual Means (OAVM)
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About THE REPORT At L&T Finance Limited ('LTF'), formerly known as L&T Finance Holdings Limited, and its subsidiaries, collectively referred to as ‘LTF’ or ‘your Company’, the commitment remains firmly rooted in delivering customer-oriented, technology driven innovative-driven offerings in a responsible and sustainable manner. Moving forward with the Lakshya 2026 strategic framework, your Company is now focusing on advancing progress at the consolidated level through consistent adherence to the five key pillars: Upholding a legacy of transparency, accountability, and commitment to stakeholder value, your Company has consistently reported its fi nancial and non- fi nancial performance through Sustainability and Integrated Reports since FY19. The Integrated Annual Report for FY25 (‘the Report’) aims to provide stakeholders with an in-depth understanding of your Company’s achievements, and future aspirations. It presents a holistic perspective on your Company's goals, performance, impact, and strategic path forward. Reporting Principle The financial and statutory data pr esented in this report complies with the requirements of the Companies Act, 2013 (‘the Act’) (including the rules made thereunder), Indian Accounting Standards, the Companies (Accounting Standards) Rules, 2006, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations’), and other applicable RBI regulations. The non- fi nancial information in the Report has been prepared in line with the framework set by the International Integrated Reporting Council (‘IIRC’) and includes Key Performance Indicators (‘KPIs’) across the six capitals. Sustainability disclosures are provided in accordance with the Global Reporting Initiative (‘GRI’), 2021 Standards, covering the period from April 1, 2024, to March 31, 2025, or as speci fi ed in the Report. Furthermore, the Report aligns with the National Guidelines on Responsible Business Conduct (‘NGRBC’), Business Responsibility and Sustainability Reporting (‘BRSR’) requirements prescribed by SEBI, the United Nations Sustainable Development Goals (‘UN SDGs’), and the Taskforce on Climate-related Financial Disclosures (‘TCFD’). 3 41 2 5 Enhancing Customer Acquisition Sharpening Credit Underwriting Implementing Futuristic Digital Architecture Heightened Brand Visibility Capability Building Integrated Annual Report 2024-252
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Scope and Boundaries The Report covers the disclosures for the period from April 1, 2024, and/or as on March 31, 2025, or as speci fi ed in the Report. The information presented herein seeks to provide a comprehensive, accurate, and balanced overview of LTF’s economic, social, and environmental performance, covering the Head Of fi ce and 2,296 branches (including rural branches), including those that have been closed. The reporting parameters align with the speci fi c boundaries outlined in Questions 13 and 23(a) of Section A: General Disclosures in the BRSR framework. The scope and boundaries for each material topic and metric are detailed either in the text where the topic is introduced or by references to the LTF website and public documents. Numbers, wherever required, have been rounded off. Precautionary Principle LTF adopts a precautionary approach in risk management and lending decisions to mitigate any adverse social and environmental impacts. Principles such as stakeholder inclusiveness, completeness, and materiality have been followed while preparing this report. These principles are outlined across various sections of the Report. Materiality and Target Audience As one of the leading Non-Banking Financial Companies, LTF has a direct economic, social, and environmental impact, along with a signi fi cant indirect impact through its fi nancial activities. In compiling the Report, topics that could materially affect stakeholders, including business and management systems, are accounted for. Other relevant matters are also reflected in the ‘Value Creation Model’. LTF continually and systematically gathers the views and opinions of stakeholders and aligns its execution/ strategy and reporting to meet evolving expectations. For the double materiality analysis, both internal and external stakeholder groups were consulted in a qualitative and quantitative manner. The Report is designed to communicate your Company’s progress to diverse groups of stakeholders who influence or are affected by LTF. These groups include employees, investors (shareholders and bond holders), regulators, customers, vendors, other value chain partners, CSR project implementing partners, and communities. The primary objective is to provide stakeholders with a clear perspective on your Company’s businesses and its ability to create and sustain value. Forward-Looking Statements The Integrated Annual Report incorporates ‘forward-looking’ statements pertaining to LTF’s anticipated performance and future events, expressed through terms such as ‘plans’, ‘expects’, ‘will’, ‘anticipates’, ‘believes’, and ‘intends.’ Recognising the inherent uncertainty and risks associated with these assumptions and predictions, your Company emphasises its disclaimer of any obligation to update such statements post-publication. Stakeholders are urged to exercise prudence and refrain from undue reliance on these statements, as actual future outcomes may differ signi fi cantly due to various external factors beyond your Company’s control, introducing an element of unpredictability. Assurance The information in the Report has undergone a thorough internal validation process and a robust assurance procedure, leveraging both your Company’s internal expertise and external validation conducted by BDO India LLP , an independent third-party assurance provider renowned in the professional sphere. An assurance review has also been conducted on the Report, adhering to SSAE 3000 Assurance Standards. The corresponding Assurance Statement is included in the Report. For ease of information access, links are embedded to relevant pages on your Company’s corporate website and the Report. Any questions or feedback on the Report can be sent to us by writing to igrc@ltfs.com. Corporate Overview Statutory Reports Financial Statements L&T Finance 3
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An overview of your Company's leadership, governance structure, and core values. Details about your Company's operating model and its strategic focus. Key highlights showcasing the performance of business verticals in a dynamic market. Who governs your Company, and how does it approach evolving market dynamics? 1 What you will find Where to look Who We Are 08 Corporate Governance 28 Chairman’s Message 18 MD & CEO’s Message 22 Management Discussion and Analysis 78 Key highlights of financial and operational performance. Sectoral contributions of your Company’s core business segments. Challenges encountered and achievements realised during the year. How has L&T Finance Limited performed financially and operationally in FY25? 4 What you will find Where to look Performance Highlights 10 Financial Capital 188 Chairman’s Message 18 MD & CEO’s Message 22 Management Discussion and Analysis 78 A comprehensive explanation of your Company’s value creation framework. Insights into financial and non- financial capital deployment. Case studies demonstrating value delivered to customers, communities, and investors. How does your Company create value for its stakeholders? 2 What you will find Where to look Performance Highlights 10 Value Creation Model 118 Stakeholder Engagement 148 ESG@LTF 122 Social & Relationship Capital 260 Management Discussion and Analysis 78 Strategic priorities driving business performance. Focused approaches that align with the Company’s vision for long- term value generation and market expansion. What are your Company’s key strategies for sustainable growth? 3 What you will find Where to look Value Creation Model 118 ESG@LTF 122 Financial Capital 188 Management Discussion and Analysis 78 How to Navigate THIS REPORT Integrated Annual Report 2024-254
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An analysis of risks affecting business performance, and the mitigation strategies employed. Insights into opportunities driving growth and innovation. Governance practices and risk management frameworks that enable resilience and adaptability. The role of technology in mitigating risks and leveraging opportunities. What are the material risks and opportunities for your Company, and how are they addressed? 5 What you will find Where to look Corporate Governance 28 Materiality Assessment 152 Management Discussion and Analysis 78 Business Responsibility and Sustainability Report 316 Key ESG initiatives and their alignment with global sustainability standards. Efforts towards climate action, green financing, and resource efficiency. Highlights of CSR projects and their impact on local communities. How is your Company contributing to a sustainable future? 6 What you will find Where to look ESG@LTF 122 Stakeholder Engagement 148 Materiality Assessment 152 Natural Capital 294 Social and Relationship Capital 260 Business Responsibility and Sustainability Report 316 A vision for the next phase of growth, including key opportunities and trends. Leadership perspectives on your Company’s long-term strategy. Plans for innovation, digitalisation, and market expansion. What lies ahead for your Company? 7 What you will find Where to look Chairman’s Message 18 MD & CEO’s Message 22 Management Discussion and Analysis 78 Financial statements and regulatory disclosures. What are your Company’s statutory disclosures? 8 What you will find Where to look Financial Statements 431 Management Discussion and Analysis 78 Business Responsibility and Sustainability Report 316 Board Report 378 Notice 674 Corporate Overview Statutory Reports Financial Statements L&T Finance 5
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Technology Driven Responsible Growth Growth, in its most resilient form, does not unfold by chance. It is designed. Shaped by insight, tempered by discipline, and rooted in a clear understanding of both opportunity and constraint. FY25 was a continuation of this belief, unfolding at the intersection of shifting macroeconomic currents and rising stakeholder expectations. In this landscape, balance mattered, and clarity and discipline were the real differentiators. Technology and growth are not parallel tracks, but interwoven principles that direct how the business operates, scales, and creates long-term sustainable value. Integrated Annual Report 2024-256
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Technology is integral to how LTF operates – embedded across every stage of the value chain to enable smarter decisions and better outcomes. From smart underwriting and predictive analytics to digital onboarding, self-serve journeys, and automated operations, every process is being reimagined for speed, precision, and experience. Your Company’s tech stack connects data to decisions, enabling real-time insights, scalable platforms, and seamless customer interactions. In a world of rising complexity, it is this digital backbone that ensures agility, resilience, and readiness for tomorrow. But technology is not the end goal, it is the propeller. It powers the direction, pace, and precision of what matters most—responsible growth. Responsible growth is about building with balance—expanding reach without compromising quality, managing scale while safeguarding trust. At LTF, responsibility is embedded in how risk is assessed, how customers are served, and how governance frameworks are upheld. With strong portfolio-level controls, early warning systems, and scenario-based planning, your Company ensures that every decision reflects both opportunity and foresight. This approach is visible in how LTF continues to deepen its presence in high-potential segments, expand its distribution network in rural, semi-urban, and urban markets, and embrace technology to scale efficiently. At the same time, a disciplined approach to governance and productivity, along with a clear focus on customer lifecycle value, ensures LTF not only grows but does so sustainably, adapting to market dynamics while maintaining profitability and operational efficiency. By using advanced AI to enhance credit decisions, forming digital partnerships to scale the business, focusing on secured lending, and strengthening tech-driven risk management, LTF has adopted a strong technology-first approach. This has helped unlock new markets, create customer value, and most importantly, empowered the business to gain a competitive edge by becoming more agile and responsive to evolving market needs. Corporate Overview Statutory Reports Financial Statements L&T Finance 7
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About L&T Finance LEADING WITH PURPOSE FOR OVER 3 DECADES As LTF marks three decades of excellence, your Company has established itself as one of the nation’s foremost NBFCs, playing a pivotal role in India’s financial ecosystem. Over these years, your Company has consistently demonstrated its commitment to empowering individuals and businesses, providing financial solutions that connect aspirations to opportunities, catering to diverse demographics, from unserved and underserved rural areas to urban centres. As part of the prestigious L&T Group, your Company leverages the legacy of its parent—rooted in excellence, trust, and an unshakeable dedication to corporate integrity. Driven by innovation and a customer-centric philosophy developed over three decades, your Company has established a strong national presence. Through digital transformation and innovation, LTF enhances accessibility and promotes financial inclusion. Your Company has earned 'AAA' credit ratings from four top credit rating agencies, underscoring its financial strength and reliability. Distinguished by its robust environmental, social, and governance ('ESG') framework and practices, LTF embodies trust, resilience, and excellence in every aspect of its operations. Publicly Listed on BSE Ltd. and NSE Limited Year of Incorporation 2011 1994 Your Company has received a Certificate of Registration (CoR) as a Non-Banking Financial Core Investment Company (NBFC-CIC). LTF has its shares and debt securities listed on the stock exchanges in India Who We Are Integrated Annual Report 2024-258
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Highest Credit Rating – ‘AAA’ AAA Top-Notch ESG Ratings Amongst Top Retail NBFCs Part of the Illustrious L&T Group Upper Layer NBFC as per RBI Classification VISION LTF envisions to be an admired and inspirational financial institution, creating sustainable value for all stakeholders. SUSTAINABILITY COMMITMENTS Become Carbon Neutral (Scope 1 and Scope 2) by 2035 Maintain Water Positive/Surplus status Achieve the set sustainability targets VALUES Ambition LTF aspires to achieve something more and doing better than it did yesterday. Pride Confidence in LTF's abilities as a stable and sustainable organisation that always contributes to the customer and every stakeholder. Discipline Creating a culture of results and not reasons, LTF places responsibility on doing what is right day after day. Integrity Integrity beyond honesty, including focus, consistency. Built on the Foundation of Trust and Commitment Corporate Overview Statutory Reports Financial Statements L&T Finance 9
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97% Retailisation Financial Capital ₹ 60,040 Cr Total Retail Disbursements ₹ 97,762 Cr Book Size ₹ 2,644 Cr Highest-Ever Annual PAT 2.44% Highest-Ever Annual Return on Assets (RoA) 10.87% Return on Equity (ROE) 3.35 Debt-to-Equity Ratio ₹ 20,480 Cr Sustainability Focused/ Priority Sector Loans 22.27% Capital to Risk (Weighted) Assets Ratio (CRAR) ₹ 102.5 Book Value per Share LTF's ANNUAL PERFORMANCE Performance Highlights 3.29% GS3 0.97% NS3 Integrated Annual Report 2024-2510
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Manufactured Capital Intellectual Capital ~2.6 Cr Customer Database 13,000+ Distribution Touchpoints 2,297 Number of Branches PAN India (Including Head Office) ~2 lakh Villages Served 100+ Cities/Towns Served 44:56 Rural to Urban Book Ratio ₹ 12,700 Cr+ Digital Sourcing (PLANET App) 100% Digital Disbursements (Rural + Urban) ₹ 3,800 Cr+ Digital Collection (PLANET App) 685 lakh+ Customer Servicing Experience through Digital Channels R.AI.SE 2024 Zero Amongst 1st in BFSI to organise an AI Event Cybersecurity Breaches AI-Powered Virtual Advisor Project Cyclops Next-Gen Underwriting Platform LTF Pearl Challenge Innovation-Led Financial Inclusion AI Hackathon Knowledgeable AI (KAI) Corporate Overview Statutory Reports Financial Statements L&T Finance 11
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~4.5x Increase in Women FLOs in Rural Business Finance 1.35 Female to Male Compensation Ratio 5.4% Women in the Workforce 38.5 Average Training Hours per Employee 8 Languages Focused DE&I Sensitisation and Awareness Session 27,217 Field Force 86% Rated LTF as ‘Great Place to Work’ ISO 45001:2018 Occupational Health & Safety Certification for Workplace Safety (HO) 63% Employees from Rural & Semi-Urban Areas (smaller towns) 8 Projects Implemented under GPTW Based on Employee Feedback Women-Centric Policies Rolled out to Support Inclusion, Safety, and Career Progression 270° Feedback Launched for Leadership Development All Active Field Level Officers Equipped with Helmets 300-400 Employees/Month Recognised under Wall of Fame For Employees Across Grades Launched DE&I Training through Gamified Module 36,521 Total Employee Headcount 27% Women in Group Executive Committee 23.6% Share of Women in STEM Related Positions Human Capital Note: For female to male compensation ratio, only basic pay considered. Integrated Annual Report 2024-2512
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61.06 lakh+ Number of Women Borrowers 0 Complaints Regarding Breaches of Customer Privacy from Customers, Outside Parties or Regulators 23.6% 54 Overall Net Promoter Score (NPS) Amongst 1st To Conduct Double Materiality Amongst 1st To Conduct Business Impact Study 39% Y-o-Y Grievance Reduction 9 Number of Low-Income States Served* ISO 26000:2010 Social Responsibility Certificate of Conformance >75% of Value Chain Annual ESG Assessment ₹ 28.18 Cr Spend over and above the CSR Obligation 16.90 lakh+ CSR Beneficiaries ₹ 30 Cr Total CSR Spend Attended by Top Banks & Vendors Value Chain Connect & ESG Workshop 2.40 lakh+ Beneficiaries Linked to Social Schemes 60% Repeat Women Borrowers ₹ 180 Cr+ Social Convergence Value 1 lakh+ Beneficiaries of Digital Seva Kendras Social and Relationship Capital * Low-income states are per National Statistical Office, Ministry of Statistics and Programme Implementation, Government of India Corporate Overview Statutory Reports Financial Statements L&T Finance 13
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~33% Company Operations on Green Power 1 lakh+ Saplings Planted > 90% Overall Plantation Survival Rate ~3,692 tCO2e Emissions Avoided (Green Power+ Green Attributes) 39 Flora & 69 Fauna Species Biodiversity Supported through Miyawaki Plantation Amongst the 1st NBFCs to Join Partnership for Carbon Accounting Financials (PCAF) 250+ Acers Green Cover 64,000+ Number of EVs Financed ~176 lakh kl Water Replenished (Watershed Management) ~973 tCO2e Sequestered through PlantationWater Management at Head Office through STP >90% increase in waste water Recycling >60% decrease in fresh water usage Adopted Sustainable Procurement Policy 25 Branches Site level HIRA Conducted 50 Branches Waste Assesment Study Conducted ~16% Carbon (Scope 1+2) Emission Saved/ Sequestered Y-o-Y Retained Water Positive/Surplus Status On Track Carbon Neutrality by 2035 Natural Capital Integrated Annual Report 2024-2514
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Amongst the 1st ~973 tCO2e *Disclaimer: As of October 2024, LTF received an ESG Risk Rating of 16.1 from Morningstar Sustainalytics and was assessed to be at a low risk of experiencing material financial impacts from ESG factors. In no event the ESG Risk Rating shall be constructed as investment advice or expert opinion as defined by the applicable legislation. CDP score for FY24, is under re-assessment 'AAA' Credit Rating Credit Rating by CRISIL, ICRA, CARE, India Ratings For ESG Ratings, please access: www.ltfinance.com/sustainability CDP Score – Climate Change 2023 A- In October 2024, LTF received an ESG Risk Rating of 16.1 and was assessed by Sustainalytics to be at low risk of experiencing material financial impacts from ESG Factors* S&P Global – Performed in top decile in the FBN Diversified Financial Services and Capital Markets Industry in the S&P Global Corporate Sustainability Assessment (Score as of January 2024) MSCI ESG Rating – As of March 2025, LTF received an MSCI ESG Rating of A ESG Ratings RATINGS Corporate Overview Statutory Reports Financial Statements L&T Finance 15
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Awards and RECOGNITION Mahatma Award for ESG Excellence Social Impact Award Certificate of Excellence and Award Fintech for Good - Champions of ESG Award Winner in the Mega Enterprise Category for Women Empowerment: Digital Sakhi Diamond Award India CSR Leadership Award Great Indian Overall Sustainable Performance in Finance Business World - Amongst top 5 Sustainable Companies - Sectoral Integrated Annual Report 2024-2516
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ISO 45001:2018 Certification ISO 9001:2015 Certification Best Banking & Finance Legal Team of the Year Best BFSI App for PLANET App and Best BFSI Website for LTF Website Silver for Best Campaign in BFSI Gold for the Best Influencer-Led Product Launch Bronze Award in the Best Digital Brand Strategy Category Best Digital Campaign Award Silver Award in the Best User Interface in an App Category for PLANET App ET Legal World - The Economic Times Global Legal Awards FAME National Award 2024 Platinum Award towards Excellence in Best CSR Practices ISO Certifications (FY25) Corporate Overview Statutory Reports Financial Statements L&T Finance 17
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Dear Stakeholders, This Integrated Annual Report marks a significant milestone for your Company as it completes 30 glorious years of empowering aspirations. The financial arm of the Larsen & Toubro Group has successfully transitioned into a customer-centric retail finance company over the years, financially uplifting people across rural and urban India and helping them achieve their dreams. The Report captures the essence of your Company’s 'Digital@ Core' philosophy and its unwavering commitment to deliver customer- oriented and technology driven innovative offerings in a responsible manner. Macroeconomic Scenario In 2024, the global economy has shown remarkable resilience in the face of an array of challenges such as geopolitical tensions, high inflation, climate events, and financial volatility. This adaptability has been instrumental in averting an economic downturn. The Indian economy has remained steady as well, duly supported by strong macroeconomic fundamentals, large domestic consumption, and consistent policy support to emerge as the fastest- growing major economy in the world. In India, financial inclusion is pivotal to achieving the ‘Viksit Bharat’ goal by 2047 to ensure that growth is both broad-based and equitable. As the country progresses, demand for From the CHAIRMAN’S DESK Chairman’s Message Investments in the thriving AI and technology sectors are expected to play a key role in the digitisation drive. Integrated Annual Report 2024-2518
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credit is expected to grow multifold, especially among the Micro, Small and Medium Enterprises (MSMEs) and the retail sector. Providing access to credit to cater to the diverse needs across geographies in the fastest and most efficient manner through transformational Artificial Intelligence (AI) and technology will be crucial in the financial inclusion of economically unserved and underserved people. Thus, investments in the thriving AI and technology sectors are expected to play a key role in this digitisation drive. The finance minister in the Union Budget FY26 speech referred to sectors like Agriculture, MSME, Investment, and Exports as four powerful engines of the development journey. As these sectors drive India’s growth story and more people gain access to formal lending systems, transforming the Indian financial services landscape, it gives me great pleasure to note that your Company is at the forefront of this transformation story. Reflecting its commitment to ‘Technology-Driven, Responsible Growth’, this year’s Integrated Annual Report highlights your Company’s performance and delivery during FY25. Driven by the adoption of futuristic digital architecture and sustaining a responsible expansion trajectory in line with Lakshya 2026 goals even during cycles, it underlines the growth philosophy of your Company. Before we move to FY25 performance, it is important for me to take a pause and reflect on the progress of our Lakshya 2026 goals and strategic initiatives undertaken by your Company. Our Transformational Journey – Lakshya 2026 Strategic Choices Your Company, with a view to effectuate the transformation from a wholesale dominated franchise to a technology-driven retail finance company, carried out a reorganisation of its business verticals and exited non-lending businesses like wealth management in the year 2020 and mutual fund business in 2022, coupled with a systematic accelerated reduction of the wholesale (infrastructure and real estate) business. To make this transformation seamless, another strategic initiative taken was the creation of a ‘Single Lending Entity' by consolidating all lending businesses under one operating NBFC in FY24. This led to the creation of a simplified corporate structure which helped build robust execution structures. Human Capital As part of its succession planning, your Company also witnessed a smooth transition of leadership in FY24, with Mr. Sudipta Roy, having extensive experience in retail and digital lending, taking over as the Managing Director and Chief Executive Officer of your Company in January 2024. This aimed at accelerating your Company on the path of becoming a cutting-edge digital retail finance company. Further, with an aim to quicken the decision-making process, localising problem-solving at the origin and significantly enhancing customer experience, a new structure of Regional Business Head was created within your Company. This role is entrusted with the ownership of regional P&L spanning across businesses and shouldering the responsibilities of delivery and growth, compliance and quality improvement, product promotion and marketing, and capability building. Portfolio/Book As a move towards enhancing its high-yield secured book exposure, both in rural and urban regions, your Company announced its entry into the gold loan business. This also aligns with your Company’s Lakshya 2026 strategy, which focuses on tapping new geographies and growing its customer base while delivering value to its stakeholders. Additionally, the gold loan business undertaking complements your Company’s existing portfolio and allows it to capitalise on the significant overlap with its current customer base of Rural Group Loan and Micro Finance operations. I am confident that this will be a key driver of future profitability. In India, financial inclusion is pivotal to achieving the ‘Viksit Bharat’ goal by 2047 to ensure that growth is both broad-based and equitable. Corporate Overview Statutory Reports Financial Statements L&T Finance 19
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Performance against Lakshya 2026 Goals In FY24, your Company achieved ‘Lakshya 2026’ goals at a retail level as per the plan and reoriented itself to converge at a consolidated level by FY26, with the goals being: >95%: Retailisation >25%: Retail Growth CAGR GS3 <3% and NS3 <1%: Asset Quality 2.8-3%: Return on Assets Today, as we reflect on the milestones achieved against Lakshya 2026, your Company has achieved 97% retailisation at the end of FY25, while rapidly reducing the wholesale book. The retail book grew at 19% Y-o-Y (28% CAGR growth - Q4 FY22 – Q4 FY25), and the wholesale book was reduced to ₹ 2,582 Cr at the end of FY25, a reduction of 53% Y-o-Y. On the asset quality side, our portfolio has shown resilience in a difficult credit environment, with consolidated GS3 and NS3 remaining stable at 3.29% and 0.97%, respectively, while achieving the highest-ever annual consolidated RoA of 2.44% in FY25. The aforesaid performance was achieved by your Company despite a challenging operating environment and credit quality challenges in the microfinance sector during the year. Your Company has a robust business model, strengthened credit and risk guardrails, proactive on-ground measures and a relentless focus on restoring collection efficiency. Year under Review Enhanced New Customer Acquisition and Farming of Good customers The focus has been on enhancing your Company’s new customer acquisition funnel while harvesting its existing customer database of ~2.6 Cr customers and increasing up-sell and cross-sell of products to its good customers. Your Company’s rural franchise is among one of the highest in the NBFC sector, with ~1.7 Cr rural customers and 90 lakh customers from urban areas. The deep PAN India retail franchise is led by its distribution capabilities covering ~2 lakh villages from 2,000 + rural meeting centres/ branches and over 200 branches across urban centres. This extensive geographic presence is also supported by 13,000+ distribution touchpoints built over a decade. Extensive Use of Digital and Data Analytics Your Company remains committed to becoming one of the preeminent technology driven lenders in the country, with building technology infrastructure to drive variety, volume, velocity, and veracity. Towards this, the next-gen initiatives undertaken during the year were: Launched Project Cyclops, an in-house-developed AI-driven, next-gen digital credit engine determining the repayment capability and credit quality of potential customers using ML- based ensemble scorecards. With this, your Company is on the path to make its underwriting capabilities even more comprehensive and accurate, Integrated Annual Report 2024-2520
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enabling it to make faster and more informed decisions at scale. This will result in improving the quality of customers being onboarded, thereby improving overall asset quality. Sealed partnerships with key fintechs like CRED and market leaders like Amazon Pay and PhonePe. Partnered with leading industry players to offer credit products to its members, enhancing product diversification strategy and improving credit availability for consumers. Our customer-facing application - PLANET App, which was soft launched in March 2022 has emerged as a powerful digital channel for our customers. The app has already crossed 17 Mn downloads, which also comprises ~16 lakh downloads by our rural customers. As of this date, this channel has done collections of more than ₹ 3,800 Cr while servicing more than 6.80 Cr requests and sourcing loans of more than ₹ 12,700 Cr (including web). Recognised as a Great Place To Work® The certification reflects our dedication towards our employees and on creating a workplace culture that is built on credibility, respect, fairness, pride, and camaraderie. Your Company has also introduced a series of employee-friendly policies for better employee engagement. Significantly Ramped-Up Presence of Brand LTF Your Company successfully conducted integrated marketing campaigns for its products, leading to a ramp-up of brand LTF in both urban and rural geographies and onboarded Jasprit Bumrah, the ace Indian cricketer, as the Brand Ambassador of your Company, as a part of the multi- channel brand building efforts. Your Company also conducted R.AI.SE, India’s premier BFSI-focused Artificial Intelligence conference showcasing practical use cases of AI in the financial services domain to BFSI industry and fintech participants. ESG Focus Your Company’s ESG journey started in 2018-19, and currently it has the best-in-class ESG ratings in the BFSI sector. Your Company has adopted the goal of achieving carbon neutrality by 2035 and is well on track to achieve the same. In FY25, your Company also maintained the status of being water surplus. Your Company is among the 1st in the Indian NBFC sector to conduct a Double Materiality Assessment as well as becoming a signatory to the Partnership for Carbon Accounting Financials for measuring its environmental footprint. Recognising the importance of diversity, the Company has also rolled out various programmes specifically designed to empower women, alongside significant policy changes that support a more inclusive environment. The efforts taken during the year have led to an uptick of women hirings by 4x in the field-level positions in the Rural Business Finance, with the overall women representation standing at 5.4% against 4.6% last year. On the social front, your Company’s flagship CSR programme, the ‘Digital Sakhi’ project, has created a cadre of 2,000+ Digital Sakhis who have benefitted 54 lakh+ individuals and helped upskill 17,000+ women entrepreneurs since its inception in 2017. I am confident that by embracing innovation, we will continue to redefine the boundaries for growth while driving efficiency and productivity across all aspects of our businesses. Our ambitious goal is to emerge as a ‘Bigger, Leaner, and Stronger’ organisation. Our ‘Can Do, Will Do, Will Get It Done’ mindset encapsulates our unshakeable determination to deliver results and exceed expectations. Finally, I wish to express our sincere appreciation to all our stakeholders and board members for their steadfast support and belief in LTF. Your trust is fundamental to our success and inspires us every day. As we move forward, we remain deeply committed to generating value and achieving sustainable growth. Thanks, S. N. Subrahmanyan Chairman Corporate Overview Statutory Reports Financial Statements L&T Finance 21
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Dear Stakeholders, I would like to extend my deepest gratitude to the Board members for their continued support and guidance throughout the year. My journey at LTF over the last almost 2 years has truly been a transformative experience, fuelled by the exceptional talent of our teams and inspiring individuals who drive our ambitious vision of becoming the best digital retail NBFC in the country. Speaking about FY25, I must admit that the year was a challenging one, but the resilience showcased both by the global and domestic economies, provided businesses some cushion to navigate the challenges. However, for LTF, the year gone by was not just about navigating challenges; it was also about seizing opportunities, achieving groundbreaking milestones, and building a foundation for delivering sustainable and predictable growth for our stakeholders. We witnessed several ‘firsts’ throughout the year, from large strategic alliances to the introduction of next-generation credit and risk governance frameworks, new product launches and the implemention of Project Cyclops, our proprietary Artificial Intelligence (AI) and Machine Learning (ML)- based credit underwriting engine at a record speed, that will propel us forward. During the year, we focused on various capability-building and employee initiatives, while also Your Company celebrated three decades of successful operations in FY25 and is strategically future-proofing its growth with each passing year. From the Managing Director and CHIEF EXECUTIVE OFFICER’S DESK MD and CEO’s Message Integrated Annual Report 2024-2522 Integrated Annual Report 2024-2522
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Digitalisation is transforming service delivery, while regulatory focus on stability and inclusion is shaping the sector's future. earning the prestigious Great Place To Work® (GPTW) Certification™, amplified our brand-building framework through impactful marketing campaigns, announced our foray into the gold loan business, and solidified our commitment to sustainability, all while navigating a complex economic environment. Your Company celebrated three decades of successful operations in FY25 and is strategically future-proofing its growth with each passing year by embracing transformative engineering and technology initiatives to solidify our position as a digital-first, digital- native lender. This Integrated Annual Report for FY25 details how we have actively charted our course towards a sustained growth trajectory, all while consistently pursuing our Lakshya 2026 goals. In 2024, India maintained steady progress amid a rapidly evolving financial landscape. Consumer credit is expanding, alongside the growth of Non-Banking Financial Companies (NBFCs). Digitalisation is transforming service delivery, while regulatory focus on stability and inclusion is shaping the sector's future. These factors, alongside the government's flagship programmes like Make in India, Start-up India, Digital India, and Smart City Mission, among others, are creating a dynamic environment that is enabling NBFCs to thrive. Your Company maintained a calibrated growth momentum despite the broader slowdown in certain sectors such as microfinance and sections of the urban unsecured lending segment. This resilience was driven by a robust five-pillar framework of execution. While the ‘Management Discussion and Analysis’ section provides a detailed account of our efforts and actions on these pillars, I am delighted to share some significant and measurable progress across each of these critical areas. The first pillar, Enhancing Customer Acquisition, focuses on broadening the rural and urban customer funnel by increasing distribution footprint. Your Company continues to engage with its robust ~2.6 Cr existing database to unlock the potential for strategic cross-selling, all while upholding the highest standards of prudent credit and risk management. This year, LTF proudly welcomed over 24 lakh new customers, a testament to its focussed acquisition strategy and granular expansion efforts. As of FY25, the Company’s expansive presence is in 21 states, 2 union territories, over 100 cities and towns, and around 2 lakh villages. Further, with the proposed acquisition of the gold loan business undertaking of Paul Merchants Finance Pvt. Ltd., a wholly owned subsidiary of Paul Merchants Ltd., we are set to enhance a high-quality customer franchise of about 1 lakh customers and 130 branches spread across 11 states. We will also be adding 700 employees to our current workforce of over 35,000. The second pillar, Sharpening Credit Underwriting, encouraged your Company to take a big leap and operationalised ‘Project Cyclops’, a state-of-the-art self-learning AI-ML- powered credit engine, by leveraging datasets from bureaus, account aggregators, and alternate data signals for more robust underwriting. Following its successful pilot and its full deployment across the dealership network of the Two-Wheeler finance business, we extended it to the Farm Equipment Finance business in Q3 FY25 and plan to extend it to our Personal Loans and Business Loans business verticals in FY26. Besides, LTF has maintained stringent portfolio and sourcing norms across all businesses and continued to uphold robust credit guardrails. Complementing the first two pillars, the third pillar focuses on Implementing a Futuristic Digital Architecture. Your Company is accelerating digital transformation, prioritising seamless and unified customer experiences by leveraging in-house engineering. It is swiftly building robust infrastructure for speed and agility. Partnerships with Amazon Pay, CRED, and PhonePe are revolutionising lending products. Your Company is pioneering AI- driven solutions like ‘Knowledgeable Corporate Overview Statutory Reports Financial Statements L&T Finance 23
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AI’ (KAI), a virtual home loan advisor; ‘Project Nostradamus’, a-state-of- the-art, first in the industry AI-driven automated real-time portfolio and credit risk management engine for enhanced customer intelligence’ and ‘Lifestyle Index Calculator’, which optimises data collection. Besides, your Company launched PLANET App 3.0 and redesigned its website to offer a differentiated Direct2Consumer experience through integrated AI workflows. These initiatives solidify LTF’s commitment to innovation and superior customer journeys within the Banking, Financial Services, and Insurance (BFSI) sector. These digital advancements are beginning to yield significant positive results. To support the retail growth and customer-centric shift, your Company prioritised Heightened Brand Visibility across all channels. This pillar ensures wider awareness of its offerings among diverse audiences, solidifying its market presence. We refreshed our Housing Finance category with an integrated marketing campaign featuring TV commercials emphasising key differentiators. We also amplified our digital presence and on-ground activations, while foraying into areas like rural influencer marketing and AI-led festive campaigns. In addition, we actively participated in events like Global Fintech Fest, India Bike Week, and Krishi Expo Hisar to foster direct consumer engagement. We are strategically enhancing our brand presence with Indian cricketer Jasprit Bumrah as our brand ambassador for our select businesses. Notably, the inaugural edition of R.AI.SE' 24, the AI-focussed event, united industry leaders, including Mr. S.N. Subrahmanyan, Chairman & Managing Director, L&T and Chairman of LTF, and Mr. Rajesh Bansal, CEO, Reserve Bank Innovation Hub. At the event, we also launched the ‘LTF Pearl Anniversary Challenge’ Hackathon, aiming to revolutionise farmer credit assessments and solidifying our commitment to innovation. Further, recognising the need for robust resources, we established the ‘Capability Building’ pillar. We created a Chief of AI & Data Officer role, a BFSI first, and Regional Business Head positions for enhanced regional oversight. Your Company is investing in AI/ML skills, especially in Credit & Risk and Tech & Engineering. The GPTW recognition underscores our commitment to a culture of credibility, respect, and fairness, driven by our core values. In pursuit of a supportive work environment, we are standardising branch operations across India, and as a result, we relocated several teams, including tech, to upgraded office spaces in Bengaluru and Navi Mumbai. We implemented strategic GPTW initiatives, including enhanced employee engagement and women empowerment. Our Human Resources vertical launched the Continuous Education Policy and Skilling and Training for Rounded Individual Development and Enhancement (STRIDE) to foster continuous employee learning. We will continue to prioritise and invest in our employees through such strategic HR programmes. Integrated Annual Report 2024-2524
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Strong retail franchise with a retail book size of ₹ 95,180 Cr, recording a growth of 19% Y-o-Y Retail disbursements for FY25 stood at ₹ 60,040 Cr, a growth of 11% Y-o-Y Retailisation at 97% of overall book Highest ever annual Return on Assets (RoA) of 2.44% vs 2.32%, up 12 bps Y-o-Y Maintained resilient asset quality with consolidated GS3 and NS3 at 3.29% and 0.97%, respectively, at the end of FY25 One of the key drivers that strengthened your Company's financial position was a strategic initiative focused on enhancing efficiency. This involved a comprehensive rightsizing restructure and streamlining operational workflows with a focus on profitability. It demonstrated our commitment to operational excellence. LTF’s Direct-to-Consumer PLANET App is rapidly becoming a preferred channel, transforming how it delivers financial services. Through the app, we are streamlining collections, sourcing new customers, and providing seamless service – all digitally. This has led to significant improvements in rural digital collections, demonstrating the power of a digital-first approach. Your Company is deeply committed to understanding and exceeding customer expectations. Since October 2023, LTF has been actively tracking our Net Promoter Score (NPS) to measure customer satisfaction. I'm happy to share that LTF has achieved an overall NPS of 54. Besides, we are continuously monitoring and analysing NPS, using these valuable insights to further strengthen customer relationships and build lasting loyalty. LTF’s security strategy centres on a Zero Trust framework, ‘never trust, always verify’, fortified by AI-driven real-time threat detection. We proactively manage vulnerabilities across all platforms (web, mobile, and API) with robust patching and conduct regular third-party risk assessments. A dedicated cyber crisis plan and isolated backups ensure business continuity. Your Company is leading the charge in Environmental, Social, and Governance (ESG) responsibility and has contributed towards reducing its carbon footprint by reducing the Greenhouse Gas (GHG) emissions while increasing reliance on renewable energy in operations. I am proud to share that your Company has top notch ESG ratings. By embracing green power, your Company has avoided over 1,800 tCO2e in carbon emissions. The EV financing initiatives further prevented an additional 12,675 tCO2e emissions. As of Q4 FY25, we have financed close to 65,000 EVs, contributing significantly to a cleaner future. LTF’s commitment to strong governance is reflected in our board composition: over 50% independent members, half of whom are women, with all statutory committees, where legally permissible, chaired by independent members. We conducted an inaugural Double Materiality Assessment, engaging internal and external stakeholders These initiatives, driven by the five pillars, have translated into remarkable financial performance. Today, your Company stands as one of the market leaders, a top financier in its anchor businesses, built carefully and strategically over the past decade. These include our flagship Rural Group Loans and Micro Finance (JLG), Farm Equipment Finance, and Two- Wheeler Finance. I'm incredibly delighted to share some key achievements on our financial performance for FY25. Highest ever annual full year Profit after Tax (PAT) of ₹ 2,644 Cr, registering a 14% Y-o-Y growth Corporate Overview Statutory Reports Financial Statements L&T Finance 25
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to identify 17 key material topics, achieving exceptional response rates. A first-ever Business Impact study using the ‘True Value Methodology’ evaluated our portfolio's societal impact. Becoming a ‘Partnership for Carbon Accounting Financials’ (PCAF) signatory, we are committed to transparent GHG emissions reporting. Achieving ISO 45001:2018 certification for our Head Office underscores our focus on workplace safety. We reinforced Diversity, Equity, and Inclusion (DEI) through mandatory, gamified modules translated into multiple languages and rolled out across management levels. On the Corporate Social Responsibility front, the flagship ‘Digital Sakhi’ project has empowered over 2,000 Digital Sakhis since its inception, who in turn have positively impacted over 54 lakh individuals and upskilled more than 17,000 women entrepreneurs. As of FY25, the Digital Sakhi project is flourishing across West Bengal, Tamil Nadu, Karnataka, Kerala, Bihar, Uttar Pradesh, and Rajasthan. The other key initiative, the ‘Jalvaibhav’ project, is actively replenishing water resources and promoting climate- Integrated Annual Report 2024-2526
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smart agriculture. With ‘Jalvaibhav’, LTF is providing integrated water resource management, creating additional water harvesting capacity, and benefitting over 12,000 farmers across 134 villages. Through ‘Project Prakruti’, your Company has partnered with farmers to plant over 2 lakh horticulture saplings, empowering small and marginal farmers to increase their income through diversified cropping. Beyond these initiatives, we are actively involved in disaster relief, mitigating the impact of natural calamities like floods. Looking back at our journey, I am genuinely filled with enthusiasm for our collective achievements, a testament to the dedication of our teams. As we gaze towards the horizon, the future of lending appears bright, illuminated by the transformative power of technological innovation. The credit landscape continues to offer opportunities across a multitude of sectors, driven by concerted efforts to foster entrepreneurship, accelerate digital adoption, domestic manufacturing, and enhanced urban infrastructure. With this promising environment as our backdrop, I am confident that a diversified NBFC like ours, we are poised to ascend to the leadership ranks among the Non-Banking Financial Companies in the country while delivering on our Lakshya goals. Our unwavering commitment to democratising credit for every Indian citizen will be the driving force behind this ascent. To achieve this vision, we have consciously organised ourselves around three core themes, namely (a) laser-sharp focus on productivity enhancement, (b) customer selection for a resilient and profitable portfolio, and (c) granular focus on cost selection, in addition to our five pillars of execution. We are strategically focusing on four key execution engines, each meticulously designed for sustained growth. The four engines are as follows: Technology: Transitioning to an integrated, modular product technology approach, leveraging AI/ML, UI/UX, and cloud computing. People: Creating a desirable work environment that attracts and retains top talent by offering challenging work, providing necessary tools, and rewarding results. Product: Focusing on customer- centric innovation, moving beyond commoditised offerings. Execution: Prioritising focused, team-orientated execution to achieve ambitious goals, emphasising hard work and a ‘1% inspiration, 99% execution’ philosophy. Finally, I want to express my sincere gratitude to all our stakeholders, especially our Board members for their invaluable guidance and my exceptional colleagues for their unwavering dedication. Thank you, Sudipta Roy Managing Director and Chief Executive Officer Corporate Overview Statutory Reports Financial Statements L&T Finance 27
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Transforming Governance into Competitive Advantage Governance transcends the confines of rulemaking, evolving into a framework that fosters transparency, accountability, and ethical stewardship. For LTF, governance is a strategic imperative that shapes its vision and underlines its long-term success. Inheriting the L&T Group’s legacy, your Company proactively integrates transparency, ethical behaviour, and accountability into its core values. At the helm, our Board of Directors, comprising diverse and seasoned members, stand at the forefront of governance. In collaboration with its Committees, the Board establishes policies and frameworks governing our business and operations. Your Company is unwavering in its commitment to the highest corporate governance standards with the primary objective being upholding long-term interests of our varied stakeholders through robust policy frameworks and prudent risk management and governance practices. Through the concerted efforts of your Company under the guidance and direction of its Board (including its Committees), your Company upholds the pinnacle of corporate governance principles in its functioning. LTF’s governance philosophy is deeply rooted in the fundamental tenets of the L&T Group: Integrity, Customer Focus, Commitment to Excellence, and Respect for Individuals. These values are not mere words, they are the guiding principles that shape every decision, from Board-level strategies to daily operational choices. Driving Integrity, BUILDING TRUST Corporate Governance Integrated Annual Report 2024-2528
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Larsen & Toubro Limited (share holding 66.24%) L&T Finance Limited (formerly known as L&T Finance Holdings Limited) (Holding Company) Governance Framework Your Company’s governance framework is built on a strong foundation of institutional decision-making, where key matters are deliberated through structured group mechanisms. The Board functions through various committees, each governed by a defined Charter or Terms of Reference (‘ToR’), which clearly outlines its roles and responsibilities. The minutes and recommendations of these committees are regularly placed before the Board, facilitating informed and transparent decisions. Beyond the regulatory committees, your Company has constituted several internal working Committees, comprising senior management and cross-functional stakeholders, which feed valuable inputs into the committees and, in turn, to the Board. This layered governance model ensures a continuous flow of insight, accountability, and collective wisdom across all levels of the organisation. The structure included herein provides a snapshot of your Company’s governance framework and its key constituents. @ Investment Manager and Trustee Company to L&T Infra Investment Partners, an AIF registered with SEBI Board of Directors Shareholders Oversight Board Committees Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds Risk Management Committee Corporate Social Responsibility and ESG Committee Nomination and Remuneration Committee Audit Committee Review Committee Asset Liability Management Committee Stakeholders Relationship and Customer Protection Committee IT Strategy Committee Management Managing Director and Chief Executive Officer Group Executive Committee 3 Internal Working Committees (Wholly Owned Subsidiaries) L&T Infra Investment Partners Advisory Private Limited@ (Non-Lending) L&T Infra Investment Partners Trustee Private Limited@ (Non-Lending) L&T Financial Consultants Limited (Non-Lending) Group Structure Corporate Overview Statutory Reports Financial Statements L&T Finance 29
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Board of Directors Our Leadership Expertise and Competencies Leadership Qualities, Financial Sector Knowledge and Experience, Exposure in Policy Shaping and Industry Advocacy, Understanding of the Regulatory Framework, Corporate Governance, Financial Expertise, Risk Management, Global Experience/International Exposure, Information Technology & Cybersecurity, Sustainability/ESG Expertise Expertise and Competencies Leadership Qualities, Financial Sector Knowledge and Experience, Exposure in Policy Shaping and Industry Advocacy, Understanding of the Regulatory Framework, Corporate Governance, Financial Expertise, Risk Management, Global Experience/International Exposure, Information Technology & Cybersecurity, Sustainability/ESG Expertise Committee Membership - Committee Membership Review Committee (Chairman) Asset Liability Management Committee (Chairman) Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds Corporate Social Responsibility and ESG Committee Stakeholders Relationship and Customer Protection Committee Risk Management Committee IT Strategy Committee Credit Committee S. N. Subrahmanyan Chairman and Non-Executive Director DIN: 02255382 Sudipta Roy Managing Director and Chief Executive Officer DIN: 08069653 Date of appointment February 28, 2022 Date of appointment January 24, 2024 Nationality Indian Nationality Indian Age 65 years Age 53 years Integrated Annual Report 2024-2530
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Expertise and Competencies Leadership Qualities, Financial Sector Knowledge and Experience, Exposure in Policy Shaping and Industry Advocacy, Understanding of the Regulatory Framework, Corporate Governance, Financial Expertise, Risk Management, Global Experience/International Exposure, Information Technology & Cybersecurity, Sustainability/ESG Expertise Expertise and Competencies Leadership Qualities, Financial Sector Knowledge and Experience, Exposure in Policy Shaping and Industry Advocacy, Understanding of the Regulatory Framework, Corporate Governance, Financial Expertise, Risk Management, Global Experience/International Exposure, Information Technology & Cybersecurity, Sustainability/ESG Expertise Committee Membership Audit Committee Nomination and Remuneration Committee Risk Management Committee Committee Membership Nomination and Remuneration Committee (Chairman) IT Strategy Committee (Chairman) Audit Committee Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds Review Committee R. Shankar Raman Non-Executive Director DIN: 00019798 Thomas Mathew T. Independent Director DIN: 00130282 Date of appointment May 1, 2008 Date of appointment July 23, 2015 Nationality Indian Nationality Indian Age 66 years Age 71 years Corporate Overview Statutory Reports Financial Statements L&T Finance 31
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Date of appointment June 28, 2018 Date of appointment January 23, 2024 Nationality Indian Nationality Indian Age 69 years Age 66 years Expertise and Competencies Leadership Qualities, Financial Sector Knowledge and Experience, Understanding of the Regulatory Framework, Corporate Governance, Financial Expertise, Risk Management, Information Technology & Cybersecurity, Sustainability/ESG Expertise Expertise and Competencies Leadership Qualities, Financial Sector Knowledge and Experience, Exposure in Policy Shaping and Industry Advocacy, Understanding of the Regulatory Framework, Corporate Governance, Financial Expertise, Risk Management, Global Experience/International Exposure, Information Technology & Cybersecurity, Sustainability/ESG Expertise Committee Membership Corporate Social Responsibility and ESG Committee (Chairperson) Stakeholders Relationship and Customer Protection Committee (Chairperson) Nomination and Remuneration Committee Risk Management Committee Committee Membership Audit Committee (Chairman) Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds (Chairman) Corporate Social Responsibility and ESG Committee Stakeholders Relationship and Customer Protection Committee Review Committee Rajani R. Gupte Independent Director DIN: 03172965 R. Seetharaman Independent Director DIN: 01846777 Integrated Annual Report 2024-2532
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Particulars Age Total FY25 <30 Years 30-50 Years >50 Years Male – 0 5 5 Female – 0 2 2 Total – 0 7 7 Particulars Independence Total Independent Non- Independent Male 2 3 5 Female 2 – 2 Total 4 3 7 For detailed information, please visit: https://www.ltfinance.com/about-us Date of appointment June 15, 2017 Nationality Indian Age 69 years Expertise and Competencies Leadership Qualities, Financial Sector Knowledge and Experience, Understanding of the Regulatory Framework, Corporate Governance, Financial Expertise, Risk Management, Information Technology & Cybersecurity, Sustainability/ESG Expertise Committee Membership Risk Management Committee (Chairperson) Audit Committee IT Strategy Committee Nishi Vasudeva Independent Director DIN: 03016991 Corporate Overview Statutory Reports Financial Statements L&T Finance 33
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Senior Management Sudipta Roy Managing Director and Chief Executive Officer Abhishek Sharma Chief Executive – SME Finance Sachinn Joshi Chief Financial Officer Sonia Krishnankutty Chief Executive – Rural Business Finance Raju Dodti Chief Operating Officer Apurva Rathod Company Secretary and Chief Sustainability Officer Santosh B. Parab General Counsel Asheesh Goel Chief Executive – Farmer Finance Integrated Annual Report 2024-2534
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Kavita Jagtiani Chief Marketing Officer Jinesh Shah Chief Executive – Urban Secured Assets & Third Party Products Debarag Banerjee Chief AI & Data Officer Nilesh Dange Chief Human Resources Officer Ramesh Aithal Chief Digital Officer Corporate Overview Statutory Reports Financial Statements L&T Finance 35
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The Board, as the governing body, provides strategic direction, sets the vision, and oversees and guides management. Committed to responsible corporate governance, it implements a framework to ensure regulatory compliance, while fostering stakeholder confidence to drive the long-term success of your Company and setting strategic direction. A well-rounded Board is crucial in navigating a dynamic business landscape, as it fosters inclusivity, supports robust risk management, and guides your Company towards achieving its long-term goals while protecting the interests of all stakeholders. As of March 31, 2025, the Board’s composition aligns with the requirements of the SEBI Listing Regulations, the Act, and RBI regulations. (two of whom are women), one Executive Director, and two Non- Executive Directors. More than 50% of the Directors are independent. Their collective expertise spans inter alia finance, information technology, risk management, ESG, international markets, and policy development. This composition is vital for ensuring a well-governed, forward-looking organisation, where independent judgement and strategic guidance are at the forefront. The Board comprises professionals from diverse industries such as multinational conglomerate, banking, finance, technology, and public policy, among others. This diversity enables the Board to draw on a wide range of perspectives and expertise, which helps address complex challenges, drive innovation, and ensure sound, balanced decision-making across all aspects of governance. Unless otherwise mandated by law, the Board Committees are chaired by Independent Directors. The chairs of various committees are carefully selected based on the specific expertise and domain knowledge of the Directors, thereby enhancing the quality and depth of Committee deliberations. The Board plays a pivotal role in overseeing governance and risk Board of Directors The Board comprises a diverse group of individuals with varied skills, experiences, and gender representation. A balanced mix of executive and non-executive directors strengthens the Board’s effectiveness, with the majority being Independent Directors, including Independent Women Directors. As of March 31, 2025, the Board consists of seven directors: four Independent Directors management, extending beyond the scope of its committees. While committees provide critical support, the Board as a whole is actively engaged in shaping strategy, addressing key risks, and ensuring adherence to regulatory, operational, and ethical standards. Its involvement is instrumental in defining your Company’s growth trajectory and strengthening the overall governance framework, ensuring alignment with stakeholder interests. Further, your Company does not have any members on the Board with a permanent board seat. 7 Total Number of Board Members 29% Independent Women Directors >50% Board members are Independent Directors Separate Role Board Chairman and the Managing Director and Chief Executive Officer Key Performance Indicators Integrated Annual Report 2024-2536
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The Act and the SEBI Listing Regulations define an ‘Independent Director,’ and your Company ensures full compliance with these definitions. Based on disclosures received from all Independent Directors and the Board’s assessment, the Independent Directors meet the conditions specified under the Act and the SEBI Listing Regulations and remain independent of the Management. In adherence to the RBI’s Scale- Based Regulations, none of the Independent Directors serve on the Boards of more than three NBFCs, whether Middle Layer or Upper Layer, simultaneously. Additionally, the Managing Director of your Company does not serve as an Independent Director in any other company. Independent Directors 6.34 Years Board >8 Years 6.05 Years Independent Directors 2-4 Years 1.2 years Managing Director and Chief Executive Officer 4-8 Years 9.50 Years Non-Executive Directors <2 Years ~97% Average Attendance in Board Meetings 4 Independent Directors 50% Of Independent Directors are Women 7 out of 9 Committees Led by Independent Directors 100% Directors Trained (Familiarisation Programmes) Policies Reviewed Annually by Committees and the Board Average Tenure of the Board (Years) Average Number of Years of Association of Directors 2 1 2 2 Corporate Overview Statutory Reports Financial Statements L&T Finance 37
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Appointment/ Reappointment of Directors All appointments and reappointments to the Board comply with the applicable legal requirements. Before selection of any director, the key areas of expertise required are identified, followed by industry analysis and engagement of HR consultant (if required) for identification of potential candidate. A multi-layer process for appointment of a Director on the Board is undertaken, ensuring orderly succession planning through the following steps: I Initiation of the process for identification of the proposed candidate well in advance (generally a year) II Identification and finalisation of key areas of expertise required on the Board III Analysis of the industry and if required, empanelment of experts to help in the identification process IV Undertaking due diligence: No conflict of interest checks Reviewing the profile and experience to ensure proper fit Screening of existing directorships Scanning information available in public domain for any negative news Reference checks Board Effectiveness and Performance In an ever-evolving and dynamic environment, your Company’s Board plays a pivotal role in navigating complexity, fostering innovation, and addressing periodic challenges—all while staying true to its purpose, values, and vision. Recognising that business landscapes, operating environments, and stakeholder priorities will continue to shift in both subtle and transformative ways, the Board provides strategic direction to keep your Company on course. To fulfil this critical responsibility, the Board employs well-established approaches to enhance its effectiveness, enabling it to oversee your Company’s strategic success and drive long-term value creation. There are 3 major levers that contribute towards the effectiveness of the Board: The NRC evaluates the candidates across several key parameters, including age, gender, educational qualifications, professional background, experience, skills, and alignment with your Company’s strategic goals. None of the Independent Director of your Company is due for re-appointment in FY26. Furthermore, the reappointment of Directors retiring by rotation, as per regulatory requirements, is subject to shareholder/member approval. Each Board member is individually elected. The resignation and removal of Directors, including Independent Directors, are governed by the provisions of Sections 168 and 169 of the Act and the SEBI Listing Regulations. Evaluation and recommendation of candidates by the Nomination and Remuneration Committee Review and recommendation by the Board Approval by shareholders/ members Together, these pillars empower the Board to navigate challenges with agility, while staying firmly aligned with your Company’s core purpose, values, and vision. People Ensuring the right mix of skills and experience Information Architecture Enabling data-driven decision-making Structures and Processes Maintaining robust governance frameworks 1st 2nd 3rd Basis the due diligence undertaken, the selection process follows a three- tier approval framework: Integrated Annual Report 2024-2538
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Strong governance requires clear structures and robust processes. At your Company, key oversight functions such as Risk, Compliance, and Internal Audit report directly to the respective Board Committees. This ensures independence and supports transparent decision-making. To further enhance Board effectiveness, several structured processes are in place. These include regular Board evaluations to assess performance, strategic planning sessions to align on long-term direction, and risk reviews to proactively manage uncertainties. This process is further supported by consistent engagement with Senior Management and other stakeholders through field / branch visits. By participating in Board meetings and strategic discussions, senior leaders provide direct insights into business operations, priorities, and challenges. This regular interaction keeps the Board closely connected to your Company’s day-to-day realities and long- term goals, resulting in better alignment and more informed decision-making. Your Company believes that well-structured information is essential for enabling meaningful discussions and informed decision-making in the Boardroom. To ensure the effectiveness of information, key parameters such as timely dissemination, conciseness, focus, prioritisation, and issue criticality are considered. Beyond internal data, external insights – sourced from social media, industry peers, and formal and informal channels, are integrated to provide the Board with a holistic view of key issues. Apart from the regular interactions during the Board meetings, the Board Members receive regular newsletters covering key developments across LTF, building thought leadership, product pulse, departmental updates, marketing and corporate communications, and key ESG & CSR, initiatives. These initiatives keep Board Members well-connected, enabling them to contribute effectively to your Company’s growth and success. Board effectiveness starts with having the right people who can help lay out the strategy and oversee governance framework. Your Company ensures a balanced mix of skills, expertise, industry backgrounds, and perspectives across the Board. This diversity supports well-rounded discussions and better decision-making. Each Director is held to clear performance and knowledge standards. Ongoing familiarisation with the business, regulatory environment, and industry trends ensures that all Board Members are equipped to contribute meaningfully. The Third Lever: Structures and Processes – Enabling Effective Governance The Second Lever: Information Architecture The First Lever: People – The Right Skills and Experience 1 2 3 Corporate Overview Statutory Reports Financial Statements L&T Finance 39
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Board Expertise and Development The Board of Directors at LTF represents a rich blend of experience and expertise, driving leadership that is in harmony with your Company’s strategic goals. Each Director brings in a distinct perspective, enriched by extensive industry knowledge, financial expertise, corporate acumen insight, and a firm commitment to risk management and regulatory adherence. Recognising the complexities of an ever-changing financial environment, LTF prioritises enhancing the Board’s capabilities through structured training programmes. These initiatives keep Directors abreast of emerging trends, regulatory shifts, and advancements in technology and sustainability. Workshops, and timely updates equip the Board with insights to make decisions that ensure sustainable value creation for stakeholders. Name S.N. Subrahmanyam Sudipta Roy R. Shankar Raman Thomas Mathew T. Rajani Gupte Nishi Vasudeva R. Seetharaman Designation Chairman and Non-Executive Director Managing Director and Chief Executive Officer Non-Executive Director Independent Director Independent Director Independent Director Independent Director Experience >41 Years >28 Years >41 Years >44 Years >44 Years >43 Years >41 Years Leadership Industry Knowledge and Experience Experience in Exposure in Policy Shaping and Industry Advocacy Understanding of Relevant Laws, Rules, Regulations and Policies Corporate Governance Financial Expertise Risk Management Global Experience/International Exposure Information Technology & Cybersecurity Sustainability/ESG Expertise Skill/Expertise Mapping of Directors Integrated Annual Report 2024-2540
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Name S.N. Subrahmanyam Sudipta Roy R. Shankar Raman Thomas Mathew T. Rajani Gupte Nishi Vasudeva R. Seetharaman Designation Chairman and Non-Executive Director Managing Director and Chief Executive Officer Non-Executive Director Independent Director Independent Director Independent Director Independent Director Experience >41 Years >28 Years >41 Years >44 Years >44 Years >43 Years >41 Years Leadership Industry Knowledge and Experience Experience in Exposure in Policy Shaping and Industry Advocacy Understanding of Relevant Laws, Rules, Regulations and Policies Corporate Governance Financial Expertise Risk Management Global Experience/International Exposure Information Technology & Cybersecurity Sustainability/ESG Expertise Corporate Overview Statutory Reports Financial Statements L&T Finance 41
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Your Company is deeply committed to empowering its Board Members with the knowledge and insights necessary to provide strategic direction with focus on strong governance. A structured and continuous learning framework is in place to ensure that both new and existing Directors remain well- informed and equipped to oversee your Company’s evolving priorities. A detailed orientation programme is conducted for newly appointed Directors, featuring interactive sessions with Senior Management. These one-on-one meetings provide valuable insights into business landscape of your Company, their responsibilities, governance duties, and the framework within which the Board and Committees operate. Directors also gain an overview of your Company’s financial performance, strategic direction, policies, and future ambitions, enabling them to align with organisational goals from the outset. In addition to the orientation programme, your Company provides regular updates to keep Board Members informed about emerging trends and priority areas. In FY25, 100% of the Board participated in specialised training programmes on ESG topics and Information Security, underscoring the increasing importance of these domains in effective governance. Additionally, in line with the significant increase in the importance of use of AI in the lending business, an AI bootcamp was arranged for the Independent Directors wherein real-world test scenarios for financial services were discussed. Performance Evaluation Your Company recognises that the performance of its Board, Committees, and individual Directors is fundamental to achieving strategic objectives and sustaining operational excellence. To uphold this standard, an annual performance evaluation process is conducted to enhance effectiveness of the Board, drive continuous improvement and strengthen corporate governance. Directors actively engage in the process, completing detailed assessment questionnaires that evaluate the Board’s overall functioning, peer evaluation, and Committee performance. These questionnaires incorporate SEBI guidelines, global best practices, and industry benchmarks. The questionnaires are also structured to include your Company’s performance on sustainability/ESG goals and targets. This year, assessment questionnaire of the Stakeholders Relationship and Customer Protection Committee underwent modification in line with the widened scope of the committee as specified in the Master Direction – Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2023, dated December 29, 2023 to include customer protection. Ensuring impartiality and confidentiality, your Company For further details on these initiatives, visit: Directors further enrich their strategic understanding through direct exposure to your Company’s operations, including branch and dealer visits and evaluation of CSR projects. A majority of the Board members have also engaged extensively with stakeholders to gain a comprehensive understanding of the business and the requirements of individuals at the operational level. Such engagements help bridge the gap between strategic planning and ground-level realities, enhancing their oversight capabilities. Regular, meaningful interactions between the Board and Senior Management define your Company’s governance ethos. Both formal and informal meetings allow Directors to share their expertise, offer strategic direction, and exchange perspectives with the management team. Your Company Secretary facilitates Directors receiving accurate, concise, and timely information, supported by detailed agenda notes shared in advance of meetings. Board's Learning and Development https://www.ltfinance.com/investors These targeted engagement efforts ensure the Board is well-prepared to steer LTF’s growth while upholding strong governance principles. Integrated Annual Report 2024-2542
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leverages the expertise of an external agency, which manages the evaluation process via a secure digital platform. After completing the evaluation, the agency provides a detailed analysis, presenting its findings through a well-defined reporting structure. NRC Chairman engages each Director in individual feedback sessions, sharing specific insights on strengths and developmental areas. A detailed review of collective findings of evaluation is undertaken in the Board and NRC meetings, leading to actionable governance enhancements. LTF’s integration of rigorous evaluation mechanisms within its governance framework demonstrates its firm dedication to improvement, accountability, and the realisation of sustained stakeholder value. Board Performance Evaluation Process Evaluation Parameters Monitoring Assessments by the Board Implementations of Actionable Points Deliberations - Nomination and Remuneration Committee and the Board Individual Feedback to Directors Corporate Overview Statutory Reports Financial Statements L&T Finance 43
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The Board Committees are governed by specific terms of reference and provide the Board with recommendations and insights to effectively discharge its fiduciary duties. In alignment with its commitment to the highest standards of corporate governance, your Company has also established a number of internal committees/ groups, in addition to those composed of Board members. These internal committees/groups play a pivotal role within your Company’s governance framework, overseeing critical areas such as operational risks, IT and data analytics, information security, liquidity, customer service, and the review of frauds and defaults. Guided by the Board’s supervision and in alignment with the Act, SEBI Listing Regulations, and RBI directives, your Company has instituted various committees. These committees, operating under defined charters, ensure targeted oversight of critical business areas, while ensuring regulatory compliance and governance excellence. The Board plays a pivotal role in overseeing governance and risk management, extending beyond the scope of its Committees. While these Committees provide critical support, the Board as a whole is actively engaged in shaping strategy, addressing key risks, and ensuring adherence to regulatory, operational, and ethical standards. Its involvement is instrumental in defining your Company’s growth trajectory and strengthening the overall governance framework, ensuring alignment with stakeholder interests. This year, the governance framework was further strengthened by several strategic enhancements. Two new committees were constituted, focusing on wilful defaults and fraud risk management, which were set up in alignment with RBI mandates. Additionally, your Company introduced a dedicated Sustainability Steering Council. While sustainability has remained integral to your Company’s ethos over the years, this Committee now provides focused oversight inter alia for integrating ESG principles into business operations, developing sustainability strategies, and monitoring sustainability performance metrics. The Asset Liability Management Committee (ALCO) and the Review Committee are chaired by the Managing Director and CEO (in line with RBI regulations), while all other committees are led by Independent Directors, ensuring impartiality and independent oversight. This leadership structure reinforces your Company’s commitment to balanced and objective decision-making. To further elevate governance practices, your Company has implemented advanced digital compliance monitoring platforms, complemented by regular review sessions between the Audit Committee Chairperson, internal auditors and compliance officer. These initiatives underscore the Board’s commitment to transparency, accountability, and the long-term success of your Company, positioning it to navigate emerging challenges and continue creating value for all stakeholders. Board Committees Integrated Annual Report 2024-2544
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Audit Committee The Audit Committee anchors your Company’s governance architecture, with its remit extending beyond conventional financial supervision. Acting independently under the Board’s direction, it ensures financial soundness, oversees risk management, and enforces compliance with regulations. Contribution to political parties during the year 2024-25 is Nil (previous year Nil). Key Responsibilities The Audit Committee’s responsibilities are comprehensive and include: Financial Oversight Supervising the financial reporting process, ensuring the completeness and accuracy of quarterly and annual financial statements before submission to the Board. Auditor Oversight Recommending the appointment, remuneration, and terms of engagement for statutory auditors and secretarial auditor, ensuring independence. Accounting Policies Monitoring changes in accounting policies, significant judgements, and adjustments arising from audit findings. Risk Management Evaluating internal financial controls and risk management systems to identify and mitigate financial, operational, and compliance risks. Fraud Monitoring Reviewing fraud reports, ensuring effective resolution, and overseeing corrective actions. Internal Audit Approving the annual audit plan, monitoring significant audit findings, and focusing on timely implementation of recommendations. Compliance Oversight Ensuring adherence to regulatory requirements, particularly financial disclosure standards. Intercorporate Loans and Investments Guaranteeing prudence, and regulatory compliance in intercorporate loans and investments. Related-Party Transactions Evaluating related-party transactions to confirm arm’s-length conduct and avoid conflicts of interest. Corporate Overview Statutory Reports Financial Statements L&T Finance 45
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The Audit Committee is chaired by Dr. R. Seetharaman, an Independent Director with experience in finance and banking. Under his leadership, the Committee functions with a high degree of professionalism and rigour. All members of the Committee are financially literate and possess expertise in accounting and financial management, which strengthens its ability to oversee complex governance matters. The Audit Committee Chairman has extensive discussions on a monthly basis with the Chief Compliance Officer, and Head Internal Audit (which also covers cases under vigil mechanism), thus ensuring enhanced oversight on the controls and processes. As a step towards enhanced corporate governance, the findings of regulatory inspections are also discussed at the Audit Committee meeting before the Board. Leadership and Composition Composition Name of the Committee Members Designation in the Committee Nature of Directorship R. Seetharaman Chairman Independent Director R. Shankar Raman Member Non-Executive Director Thomas Mathew T. Member Independent Director Nishi Vasudeva Member Independent Director Nomination and Remuneration Committee (NRC) The Nomination and Remuneration Committee acts as a driving force behind your Company’s leadership capital. The Committee’s mandate extends beyond routine appointments and compensation decisions—it focusses on creating a robust leadership pipeline, ensuring fair and transparent performance assessment systems, and developing compensation structures that drive both individual excellence and organisational success. Through its oversight of talent management and succession planning, the NRC supports your Company’s long-term objectives. Key Responsibilities The NRC is entrusted with comprehensive responsibilities that encompass: Leadership Appointments Identifying, evaluating, and recommending appointments or reappointments of Senior Management Personnel (‘SMP’), Key Managerial Personnel, and Directors. Ensuring leadership continuity through proactive succession planning. Performance Evaluations Conducting detailed assessments of the Board, its Committees, and individual Directors to maintain governance effectiveness. Integrated Annual Report 2024-2546
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The NRC Committee is chaired by Mr. Thomas Mathew T., an Independent Director with a strong background in governance and leadership. The Committee members bring extensive experience in business strategy, finance, and human capital management. Leadership and Composition Composition Performance-Linked Remuneration Defining and approving Key Performance Indicators (KPIs) for the Managing Director & CEO, and SMPs. Linking remuneration to individual and Company- wide achievements while benchmarking compensation against industry standards to attract and retain talent. Policy Development Crafting policies for Director appointments, Board diversity, and remuneration, ensuring alignment with governance best practices and the organisation's strategic objectives. Employee Stock Option Scheme (‘ESOS’) Overseeing the ESOS to incentivise employees, aligning their contributions with LTF’s growth objectives. Diversity and Inclusion Promoting diversity within the Board and leadership team by encouraging varied perspectives, experiences, and expertise. Workforce and Attrition Management Monitoring workforce trends, identifying root causes of attrition, and recommending strategies to enhance employee retention and engagement. Periodic reviews ensure the implementation of corrective actions. Long-Term Success Planning Ensuring that leadership frameworks align with your Company’s strategic direction, fostering sustainable growth and governance excellence. Name of the Committee Members Designation in the Committee Nature of Directorship Thomas Mathew T. Chairman Independent Director R. Shankar Raman Member Non-Executive Director Rajani R. Gupte Member Independent Director Corporate Overview Statutory Reports Financial Statements L&T Finance 47
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Corporate Social Responsibility (CSR) and ESG Committee The Corporate Social Responsibility (CSR) and ESG Committee is central to ensuring LTF’s commitment to responsible and sustainable practices. Established in accordance with Section 135 of the Act, this Committee guides the strategic direction of your Company’s CSR and ESG initiatives. Key Responsibilities The CSR and ESG Committee oversees a broad range of responsibilities to ensure effective implementation of CSR activities and sustainability initiatives, including: Policy Formulation and Review Develops and reviews policies for CSR and ESG activities, setting goals and action plans for sustainable development. Business Responsibility and Sustainability Report (BRSR) Reviews and recommends the BRSR for approval by the Board, evaluating your Company’s sustainability performance across environmental, social, and governance dimensions. Annual Action Plans Recommends to the Board annual action plans for CSR activities, including budget allocations. Stakeholder Engagement Ensures that CSR and ESG initiatives address the expectations of key stakeholders, including communities, investors, regulatory bodies, and shareholders. Progress Monitoring Tracks the implementation of CSR and ESG projects, ensuring adherence to the approved policy and compliance with regulatory requirements. The CSR and ESG Committee is chaired by Dr. Rajani R. Gupte, an Independent Director and a seasoned institution builder, bringing extensive expertise in managing diverse stakeholders. The composition of the Committee reflects a blend of executive and independent leadership, ensuring robust oversight of CSR and ESG initiatives. Leadership and Composition Composition Name of the Committee Members Designation in the Committee Nature of Directorship Rajani R. Gupte Chairperson Independent Director Sudipta Roy Member Managing Director and Chief Executive Officer Dr. R. Seetharaman Member Independent Director Integrated Annual Report 2024-2548
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Risk Management Committee (RMC) The Risk Management Committee is an integral part of LTF’s governance structure, responsible for overseeing the identification, assessment, and mitigation of risks across the organisation. Through the development and execution of a robust risk management policy, the RMC ensures your Company’s resilience, equipping it to handle various risks, including financial, market, operational, sectoral, ESG-related, and emerging risks like cybersecurity and climate change. Key Responsibilities The RMC’s primary responsibilities encompass: Risk Management Policy Formulation Developing and reviewing your Company’s risk management policy to ensure comprehensive coverage of financial, market, operational, and ESG-related risks. The policy also addresses information security, cybersecurity, and emerging risks, adapting to the evolving landscape. Risk Identification and Assessment Identifying potential risks to LTF’s operations and performance. Conducting detailed analysis across various functions, businesses and sectors, evaluating the materiality and impact of these risks, formulating appropriate mitigation strategies. Corporate Overview Statutory Reports Financial Statements L&T Finance 49
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Monitoring and Evaluation Continuously monitoring risks and assessing their impact on performance. Reviewing risk assessment processes, grades, and mitigation measures to ensure that the risk management framework remains aligned with your Company’s strategic objectives and risk appetite. Reporting Regularly reporting on identified risks, mitigation strategies, and progress towards addressing these risks. Reviewing risk strategies, risk mitigation actions, and steps taken to control and manage the risks. The RMC Committee is chaired by Ms. Nishi Vasudeva, an Independent Director, with a wealth of experience in risk management, operational strategy, and governance. The composition of the Committee ensures a diverse and balanced viewpoint, with members bringing expertise in finance, cybersecurity, governance risks, and overall business strategy. Leadership and Composition Composition Asset-Liability Management Committee (ALCO) The Asset-Liability Management Committee oversees market risks, liquidity management, and compliance with the Board- approved asset-liability management framework. By ensuring adherence to risk tolerance limits and regulatory guidelines, especially those from the Reserve Bank of India (RBI), ALCO preserves the integrity of LTF’s financial management practices. Key Responsibilities ALCO’s responsibilities among others include management of assets and liabilities to ensure liquidity, including: Market Risk Management Monitoring market conditions and their impact on your Company’s balance sheet. ALCO ensures the implementation of strategies to manage interest rate and liquidity risks effectively. Name of the Committee Members Designation in the Committee Nature of Directorship Nishi Vasudeva Chairperson Independent Director Managing Director and Chief Executive Officer Member - R. Shankar Raman Member Non-Executive Director Rajani R. Gupte Member Independent Director Chief Financial Officer Member - Company Secretary Member - Chief Risk Officer Member - Integrated Annual Report 2024-2550
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The ALCO Committee is chaired by the Sudipta Roy Managing Director and Chief Executive Officer, as per RBI Master directions. It comprises members with expertise in finance, risk management, and market strategy, ensuring a comprehensive approach to managing risks and aligning with regulatory standards. Leadership and Composition Composition Regulatory Compliance Adhering to RBI’s guidelines on asset liability management. Ensuring that LTF remains compliant with risk tolerance limits and other regulatory standards. Strategic Oversight Aligning business strategies with risk management objectives, ALCO provides actionable recommendations to mitigate financial risks, ensuring LTF’s financial framework supports its strategic goals. Liquidity Management Overseeing liquidity strategies to optimise financial resources and maintain adequate cash flows. Aligning their strategies with broader business objectives and budgetary considerations, ensuring sound financial planning. Name of the Committee Members Designation in the Committee Nature of Directorship Managing Director and Chief Executive Officer Chairman - R. Govindan Member Representative of L&T Chief Financial Officer Member - Chief Risk Officer Member - Chief Economist Member - Chief Executives of Respective Businesses Member - Treasurer Member - Corporate Overview Statutory Reports Financial Statements L&T Finance 51
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IT Strategy Committee (ITSC) The IT Strategy Committee is a pivotal body responsible for steering LTF’s digital transformation efforts, ensuring that technology investments align with organisational objectives. The Committee focuses on leveraging IT for innovation, operational efficiency, and an enhanced customer experience while effectively managing cybersecurity challenges. Key Responsibilities ITSC is tasked with overseeing the formulation and execution of IT strategies, policies, and governance structures, including: IT Risk Management Managing IT risks, including cybersecurity, and ensuring effective mitigation strategies are in place. Reviewing IT governance frameworks and resource needs, ensuring they provide business value, efficiency, and accountability. Cybersecurity and Fraud Prevention Approving strategies to address cybersecurity risks, reviewing incidents, and vulnerabilities, and implementing corrective actions. Ensuring that IT systems comply with regulatory requirements and safeguard data security. IT Strategy and Alignment Formulating and overseeing the implementation of IT strategies that align with LTF’s strategic goals to drive growth. IT Operations Oversight Overseeing the sourcing and utilisation of IT resources and ensuring governance of outsourced IT operations. This includes regular reviews of IT performance, cost efficiency, and risk mitigation measures. Integrated Annual Report 2024-2552
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The ITSC provides periodic updates to the Board on strategy implementation, IT risk management, and cybersecurity initiatives, ensuring a transparent and informed decision-making process. ITSC Committee is chaired by Mr. Thomas Mathew T., an Independent Director with experience in the life insurance sector and expertise in managing IT functions. The Committee is supported by members with diverse skills, including IT strategy, risk management, cybersecurity, and digital transformation. Leadership and Composition Composition Sub-Committees The ITSC is supported by two sub- committees: IT Steering Committee Focusses on planning, oversight, and aligning IT activities with business needs. Information Security Committee (ISC) Manages cybersecurity, reviews incidents, and oversees risk mitigation measures, ensuring compliance and resilience. Name of the Committee Members Designation in the Committee Nature of Directorship Thomas Mathew T. Chairman Independent Director Managing Director and Chief Executive Officer Member - Nishi Vasudeva Member Independent Director Chief Information Officer (Chief Digital Officer) Member - Chief Technology Officer Member - Chief Risk Officer Member - Chief Information Security Officer Member - Chief Financial Officer Member - These sub-committees provide detailed oversight, ensuring that the IT infrastructure remains robust, compliant, and aligned with strategic objectives. IT Strategy Committee IT Steering Committee Information Security Committee Corporate Overview Statutory Reports Financial Statements L&T Finance 53
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Stakeholders' Relationship and Customer Protection Committee (SRCPC) The Stakeholders' Relationship and Customer Protection Committee ensures that LTF operates responsibly, transparently, and in a customer-centric manner. By upholding the interests of security holders and customers, the SRCPC guarantees that governance practices align with regulatory requirements and your Company’s strategic goals. No equity shares were issued with differential rights as to dividend, voting or otherwise during FY25. Your Company has not resorted to any buy back of its equity shares during FY25. Furthermore, your Company does not provide financial assistance to its employees for the purchase of its shares. Key Responsibilities The SRCPC overseas primarily grievances of shareholders, debenture holders and customers, including: Investor Complaints Management Addressing issues related to share transfers, non-receipt of balance sheets, and concerns regarding dividends and interest payments, while ensuring the prompt resolution of complaints and grievances from security holders. Customer-Centric Initiatives Overseeing the resolution of customer grievances through the Internal Grievance Redressal Mechanism. Reviewing and approving the Standard Operating Procedures (SOPs) related to customer service and protection, ensuring effective resolution of customer concerns. Facilitating Shareholder Participation Promoting effective shareholder engagement, ensuring the timely receipt of dividends, annual reports, and statutory notices. Governance and Oversight Monitoring and reporting on the effectiveness of customer service policies and customer satisfaction metrics. Working closely with the Internal Ombudsman (IO), who provides insights into grievance resolution, ensuring alignment with governance principles and LTF’s customer service standards. The SRCPC Committee is chaired by Dr. Rajani R. Gupte, an Independent Director and a seasoned institution- builder, bringing extensive expertise in managing diverse stakeholders. Leadership and Composition Composition Name of the Committee Members Designation in the Committee Nature of Directorship Rajani R. Gupte Chairperson Independent Director Sudipta Roy Member Managing Director and Chief Executive Officer R. Seetharaman Member Independent Director Integrated Annual Report 2024-2554
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Oversight Ensuring the effectiveness of your Company’s fraud risk management framework. Composition Review Examining fraud cases, conducting root cause analysis, and recommending corrective measures to strengthen internal controls, enhance risk management, and minimise fraud occurrences. Reviews are conducted as per the periodicity outlined in your Company’s Fraud Risk Management Policy and Reporting Framework. Early Warning Signals Monitoring the effectiveness of the framework for identifying and addressing early warning signals of potential fraud. The SCBMF is chaired by the Dr. R. Seetharaman having experience in finance and banking, with Managing Director and Chief Executive Officer and Independent Director as members of the Committee. Leadership and Composition Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds (SCBMF) The Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds is responsible for reviewing and monitoring fraud-related cases and ensuring robust fraud risk management within your Company. Name of the Committee Members Designation in the Committee Nature of Directorship R. Seetharaman Chairman Independent Director Managing Director and Chief Executive Officer Member - Thomas Mathew T. Member Independent Director Key Responsibilities The SCBMF is responsible for: Corporate Overview Statutory Reports Financial Statements L&T Finance 55
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Governance Pillars: A Commitment to Excellence At LTF, governance isn’t just a compliance checkbox—it is a journey of continuous improvement, innovation, and stakeholder trust-building. Your Company’s secretarial practices represent its commitment to governance excellence, transparency, and stakeholder trust. By proactively adopting global best practices and transcending statutory requirements, LTF continues to set industry benchmarks in governance. From tracking actionable insights to fostering sustainability governance, these initiatives reflect a forward- thinking approach. Independent and robust oversight frameworks underscore your Company’s dedication to aligning with evolving regulatory landscapes and enhancing long-term stakeholder value. Elevating Governance Standards ISO 9001:2015 Corporate Secretarial Department of LTF has successfully obtained ISO 9001:2015 certification from TUV Nord. This certification reflects your Company’s commitment to excellence in delivering secretarial and investor services, executing corporate actions for stakeholders, and ensuring regulatory compliance. The RC Committee is chaired by the Managing Director and Chief Executive Officer, along with two Independent Directors as members of the Committee, as per RBI directives. Leadership and Composition Composition Name of the Committee Members Designation in the Committee Nature of Directorship Managing Director and Chief Executive Officer Chairman - Thomas Mathew T. Member Independent Director R. Seetharaman Member Independent Director Review Committee (RC) The Review Committee (RC) is responsible for overseeing the review of cases classified as wilful defaulters in accordance with RBI regulations. Comprising Independent Directors, the Committee ensures fairness by providing defaulters with an opportunity to present their case, thereby safeguarding the interests of all stakeholders. Key Responsibilities The RC is responsible for: Review Evaluating proposals submitted by the Identification Committee for classifying wilful defaulters. Opportunity to be Heard Ensuring defaulters have the right to a personal hearing before the Committee. Fair Assessments Examining facts, supporting materials, submissions, and written representations from borrowers. Fair Judgement Issuing well-reasoned decisions on reviewed cases. Integrated Annual Report 2024-2556
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Promoting Dematerialisation Recognising the regulatory shift towards dematerialisation, your Company has taken proactive measures to reduce physical shareholding, fostering a secure and efficient shareholder experience. Strengthening Training and Awareness In light of the evolving regulatory landscape, regular training and awareness sessions are conducted. This is supported by building capacity of the corporate secretarial team. Strengthening Trust through Robust Oversight Independent Governance Your Company maintains a higher-than- required representation of Independent Directors across some of the key committees, reinforcing its commitment to transparency and unbiased decision- making. Sustainability Governance ESG policies undergo regular evaluation and Board approval, based on Sustainability Steering Council and CSR and ESG Committee recommendations, reflecting your Company’s persistent commitment to sustainability and corporate responsibility. Driving Accountability and Action Actionable Tracking An Action Taken Report captures key decisions and suggestions from Board and Committee meetings, clearly highlighting ownership and accountability. These actions are diligently tracked, reviewed, and discussed in subsequent meetings to ensure timely execution and closure. Leading with Stakeholder Focus Proactive Investor Grievance Mechanism A robust, Board-approved Investor Grievance Redressal Policy ensures seamless resolution of investor concerns, highlighting your Company’s proactive approach to safeguarding stakeholder trust. Customer-Centric Approach Expanding its mandate, the Stakeholders' Relationship Committee now includes customer protection as a core focus, ensuring independent oversight with a majority of members being Independent Directors. This year, a thorough policy review was conducted with a focus on Diversity, Equity, and Inclusion (DE&I), leading to more inclusive and gender- neutral language in the Policies. Digitisation BOT capability was implemented to track market rumours in ~20,000 newspapers registered in India and ~390 operational news channels for effective reporting. Digitisation of proceedings (speaking minutes) of Board and Committees was undertaken through AI capability. In order to eliminate use of paper/ emails for approvals, a Digital Approval System has been launched. Separate Posts of Chairman and Managing Director The Chairman of the Board of your Company is a Non-Executive Director and his position is separate from that of the Managing Director. They are not related to each other. Investor Relations During the current year, your Company has met multiple investors and analysts–both domestic and international. These sessions were undertaken through a mix of one-on-one or group meetings. Your Company also participated in multiple domestic conferences organised by reputed broking houses, in addition to accessing overseas investors through Non-Deal Roadshows. Conducting meetings in virtual format enabled access to a broader investor base. Corporate Overview Statutory Reports Financial Statements L&T Finance 57
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Policies Guiding Ethical Behaviour Your Company upholds a governance framework centred around transparency, accountability, and integrity, ensuring fairness, and nurturing long-term trust with stakeholders. LTF’s firm adherence to policies on anti-bribery, workplace harassment prevention, whistleblower protection, and insider trading, are regularly updated to reflect regulatory and operational shifts, and sets the standard for ethical conduct. The Board and its Committees ensure that these principles are embedded in the decision-making and operations of your Company, reinforcing the commitment to responsible and sustainable business practices. Process of Addressing and Resolving the Reported Incident Reporting a Suspicious Observation Written Oral Email Whistleblower Investigation Committee Audit Committee Head Internal Audit Investigation Report/ Recommendations The Chairman of the Audit Committee has direct access to all complaints raised, which enhances the robustness and independence of the function and the framework. Vigil Mechanism The Vigil Mechanism Framework allows Directors, employees, and service providers to report unethical practices without fear of retaliation. It ensures that whistleblowers’ identity is kept confidential, enabling them to report issues via secure channels like email and mail. The Whistleblower Investigation Committee oversees the process, carrying out investigations and advising on corrective actions to address any identified issues swiftly. This policy underscores LTF’s dedication to maintaining high standards of transparency and ethical conduct in its operations. To access the policy, please refer to the 'Policy Compendium' section. Integrated Annual Report 2024-2558
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Code of Conduct Your Company has adopted a comprehensive Code of Conduct (CoC) that applies to all employees, including Executive Directors. This CoC provides clear guidance on maintaining fair employment practices, upholding anti-corruption standards, and ensuring confidentiality. Employees are instructed to avoid conflict of interest in both their professional duties and personal relationships and are expected to use your Company’s assets responsibly. This Code is reinforced through periodic acknowledgment processes and training sessions, ensuring ongoing awareness across the workforce. Any infractions are addressed transparently by the CoC Committee, helping to maintain an ethical and compliant workplace culture. Importantly, there were no reported breaches, conflicts, or penalties associated with anti-competitive practices during the reporting period. To access the policy, please refer to the 'Policy Compendium' section. Prevention of Sexual Harassment at the Workplace (POSH) LTF is dedicated to providing a safe and equitable workplace, guided by a strict zero-tolerance stance on harassment. The POSH policy, in alignment with the Sexual Harassment of Women at Workplace Act, 2013, covers all employees, including temporary and contractual staff members. An Internal Committee, with the inclusion of an external independent member, is responsible for handling complaints and ensuring a robust, impartial grievance redressal mechanism. In FY25, 10 complaints were lodged, substantiated, and resolved, reaffirming your Company’s ongoing commitment to a harassment-free work environment. Additionally, comprehensive POSH training is available through the in-house developed digital portal for training initiative, Gurukul platform as part of the induction process and annual sensitisation sessions. Anti-Corruption Policy Your Company’s Anti-Corruption Policy, available on the LTF website, sets clear guidelines for engaging with government and business entities. It outlines the definition of bribery, governs charitable donations, and explicitly prohibits political contributions, except if they are in compliance with law. This policy applies to all employees, Directors, and external partners representing your Company. A specialised Risk Containment Unit takes proactive measures to identify and reduce risks linked to corruption and financial misconduct. To access the policy, please refer to the 'Policy Compendium' section. identifying, assessing, monitoring, and mitigating compliance risks. The Chief Compliance Officer (CCO), alongside Senior Management, and the Board, provides continuous oversight. Policy on Internal Corporate Governance This policy delineates the governance structure and code of conduct for the Board, providing parameters for disclosure, transparency, and reporting. It also affirms your Company’s adherence to the appropriate standards for Directors, underscoring its commitment to responsible leadership. Compliance Policy Designed to ensure regulatory compliance, your Company’s Compliance Policy incorporates a comprehensive framework for The integration of the Compliance Insights tool enhances governance by enabling seamless enterprise-wide compliance tracking and reporting. Periodic process evaluations and audits keep the framework aligned with evolving regulations, minimising exposure to potential risks. Consistent reporting to regulators and the Board underscores your Company’s commitment to ethical governance and operational excellence. Securities Dealing Code The Securities Dealing Code governs the ethical handling of securities, ensuring compliance with insider trading regulations. Applicable to employees, Directors, and designated persons, it establishes strict guidelines for managing unpublished price-sensitive information (UPSI) and trading activities. Pre-clearance and periodic disclosures are mandated under the policy, with training programmes ensuring awareness and adherence. Any violations are subject to disciplinary actions, safeguarding your Company’s integrity and promoting ethical trading practices. Corporate Overview Statutory Reports Financial Statements L&T Finance 59
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Policy on Related Party Transactions Your Company’s Policy on Related Party Transactions ensures a structured approach to the reporting, approval, and disclosure of all related party transactions. It mandates that such transactions are conducted on an arm’s length basis, maintaining fairness and transparency while safeguarding shareholder interests. The policy upholds the principle of no conflict of interest, ensuring that no undue advantage is extended to related parties. Only the Independent Directors of the Audit Committee, approve all related party transactions of your Company and its subsidiaries, ensuring strict compliance with the SEBI Listing Regulations and the Act. To access the policy, please refer to the 'Policy Compendium' section. Third-Party Code of Conduct Your Company enforces a Third- Party Code of Conduct applicable to vendors, borrowers, and other business partners. This Code establishes clear standards for ethical business practices, environmental stewardship, and social sustainability across your Company’s value chain. Compliance with the code is mandatory, and it explicitly prohibits actions that violate applicable laws. Your Company actively promotes awareness of responsible business conduct, assessing over 75% of its vendor partners on ESG practices in FY25. Tax Strategy The tax strategy of your Company is in strict compliance with local tax laws, timely and accurate reporting, and a commitment to operational transparency. Tax obligations are managed through regular internal evaluations, legitimately leveraging tax incentives as per applicable law, and taking proactive approach to risk reduction. Your Company has effective systems to identify and report taxation risks, seeking updates and providing trainings. Compliance is crucial for uninterrupted operations, and your Company remains committed to its tax responsibilities. Dividend Distribution Policy Your Company’s Dividend Distribution Policy is designed to maintain a balance between rewarding shareholders and ensuring long-term financial stability. Dividend payouts are determined by assessing financial performance, liquidity position, business expansion plans, and regulatory requirements. The Board periodically evaluates your Company’s profitability, retained earnings, and prevailing market conditions before recommending dividends. Additionally, your Company adheres to the applicable regulatory framework to ensure compliance while optimising shareholder returns. This disciplined approach underscores your Company’s commitment to delivering consistent value while maintaining a prudent capital allocation strategy. To access the policy, please refer to the 'Policy Compendium' section. Integrated Annual Report 2024-2560
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ESG Governance Your Company has established a robust, multi-tiered ESG governance framework designed to ensure transparency, accountability, and tangible progress. Leading this initiative is the Board-level CSR and ESG Committee, chaired by Dr. Rajani R. Gupte, an Independent Director who holds expertise in managing diverse stakeholders and sustainability issues. One of the Directors in the Committee, holds a PhD in Green Bank and sustainability further strengthening the Committee's focus. The Committee is responsible for overseeing the implementation of the ESG Policy, ensuring it is aligned with your Company’s long-term goals and evolving regulatory requirements. Reporting to this Committee, the Sustainability Steering Council (‘SSC’) is a strategic body comprising senior leaders from key functions, responsible for guiding and overseeing the Company’s sustainability agenda. SSC ensures alignment on ESG priorities, identifies material risks and opportunities, and supports informed decision-making on sustainability initiatives. Furthermore, ESG-related KPIs are integrated into the KPIs of Senior Management, ensuring that leadership accountability extends to ESG performance. The Managing Director and CEO's compensation includes ESG targets as part of his Key Result Areas (KRAs), with oversight by the Nomination and Remuneration Committee to ensure alignment with long-term performance goals. ESG materiality training for leaders further equips decision-makers to address emerging challenges effectively. Throughout the year, your Company strictly adhered to all relevant environmental and social regulations, demonstrating its commitment to regulatory compliance and responsible business practices. The governance structure extends across three levels: Board-Level CSR and ESG Committee Sustainability Steering Council LTF Sustainability Team LTF Business Heads LTF Function Heads Oversees CSR and ESG Policy implementation Reviews and monitors ESG integration into your Company’s operations Responsible for the implementation of the ESG Policy & initiatives Develops strategy for embedding sustainability into business & processes Corporate Overview Statutory Reports Financial Statements L&T Finance 61
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ESG Risk Management As the global environment becomes more volatile, influenced by economic fluctuations, regulatory changes, and the rapid pace of digital transformation, the financial sector must adapt by embedding Environmental, Social, and Governance (ESG) factors into their foundational strategies. In India, the increasing demand for companies to disclose non-financial and ESG-related information is urging businesses to embrace transparency, accountability, and sustainable practices. As a leading NBFC in the industry, LTF has recognised the strategic value of ESG and has integrated it into its long-term vision. Through its comprehensive five-year roadmap, ESG is not just seen as a regulatory obligation but as a catalyst for long-term growth, resilience, and competitive positioning. Your Company takes a multifaceted approach to incorporating ESG principles throughout its operations, business strategies, and organisational culture, all aimed at fostering positive, sustainable outcomes for its stakeholders. LTF views the transition to a low-carbon economy as both a challenge and an opportunity for growth, aligning its strategies with the broader goal of sustainability. ESG considerations are now seamlessly embedded into your Company’s decision-making processes, ensuring that innovation, agility, and significant impact are realised at every level. Moreover, LTF’s commitment to sustainability influences its operational framework and is vital to its long- term success, while striving to make a positive impact on society, the environment, and its stakeholders. Robust ESG Policy Framework ESG Policy Health and Safety Policy Diversity, Equity and Inclusion Policy Human Rights Policy Data Privacy Policy Environment Policy Grievance Redressal Policy Vigil Mechanism Framework Policy on Appointment/Remuneration/Compensation for Director, Senior Management Personnel, KMP and Others E-Waste Policy Anti-Corruption Policy CSR Policy Investor Grievance Redressal Policy Fair Practice Code Business Continuity Policy Policy for KYC Norms/AML Standards/CFT Information Technology Policy Enterprise Risk Management Policy Protection Policy Policy on Planning and Raising of Resources Risk-Based Internal Audit Policy Information System Audit Framework Sustainable Procurement Policy Integrated Annual Report 2024-2562
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Value Chain Governance LTF’s governance model is anchored on the principles of transparency, ethical conduct, and sustainability, representing the values inherited from Larsen and Toubro Limited, the Parent. Your Company is committed to upholding the highest standards of governance, reflected in its responsible approach to business, environmental stewardship, and social responsibility. Sustainability is integrated into every aspect of LTF’s operations, with a strong focus on meeting the expectations and needs of its stakeholders. The Third-Party Code of Conduct is fundamental in regulating LTF’s relationships with its value chain partners, including vendors, borrowers, and other business associates. This code ensures that all partners adhere to the highest legal and ethical standards, including compliance with applicable laws, the prevention of conflict of interest, and a strict zero-tolerance stance on bribery and corruption. Additionally, partners are expected to comply with anti-trust laws, protect data privacy, and implement robust business continuity strategies. Beyond compliance, LTF encourages its partners to take proactive measures to reduce environmental impacts, such as tracking greenhouse gas emissions and reducing waste, further promoting sustainable practices across the value chain. LTF is equally committed to fostering fair and ethical employment practices across its value chain. This commitment includes ensuring fair wages, prohibiting forced and child labour, and providing a safe working environment. Your Company further encourages its partners to adopt sustainable sourcing practices and engage with marginalised groups, promoting inclusivity and corporate responsibility. Non-compliance with these standards is taken seriously, and in cases of major breaches, LTF enforces a strict policy of taking actions including severing ties. This strict adherence to ethical principles underscores LTF’s dedication to preserving the integrity of its value chain and ensuring that all stakeholders are aligned with your Company’s values. Policy Advocacy and Industry Association Your Company prioritises responsible involvement in public policy and active participation in industry associations as integral to its sustainability and ethical governance principles. By advocating for sound, sustainable regulations and collaborating with industry groups to address collective challenges, your Company ensures that its policy initiatives are guided by transparency, accountability, and stakeholder alignment. Engagement with regulatory authorities remains a priority, with well-researched proposals submitted on consultation papers to ensure LTF’s perspectives are considered. Furthermore, regular updates to the Board ensure that strategic decisions reflect the latest regulatory developments. Additionally, LTF reinforced its industry standing through key memberships and collaborations with prominent trade and industry bodies. These affiliations allow LTF to contribute significantly to essential policy discussions, positioning your Company as a thought leader in the evolution and shaping of the financial sector’s regulatory standards. To know more about LTF’s Trade and Industry Chambers/Associations, please refer to Principle 7 of the BRSR. Corporate Overview Statutory Reports Financial Statements L&T Finance 63
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Risk is no longer a mere challenge; it is a gateway to resilience and growth. At LTF, risk management has evolved into a dynamic, forward-thinking discipline, redefining how it responds to uncertainties. By not just mitigating risks but transforming them into strategic opportunities, LTF is building a foundation for long- term sustainability and stakeholder confidence. LTF’s approach is woven into every layer of operations, shaping a framework that anticipates disruptions and drives proactive decision-making. Proactive Risk Management - Anticipating Challenges, Ensuring Resilience A Strategic Approach to Risk Management LTF’s risk management framework is built on a commitment to operational excellence and strategic foresight. Anchored by an enterprise-wide approach, the framework is designed to identify, assess, and address risks across the organisation while ensuring alignment with long- term strategic objectives. To ensure accuracy and robustness, LTF employs a combination of cutting-edge quantitative tools and qualitative insights to provide a 360-degree view of the risk landscape, enabling teams to prioritise vulnerabilities effectively. Furthermore, your Company conducts regular stress tests to assess balance sheet durability, focusing on liquidity and interest rate fluctuations. It maintains a positive interest rate sensitivity gap over a one-year horizon as a safeguard. Liquidity stress tests are performed under various scenarios, ensuring a 30-day survival buffer with High- Quality Liquid Assets. By embedding Early Warning Signals (EWS) into its operations, LTF can detect vulnerabilities before they escalate. These signals are complemented by scenario- based stress testing, which evaluates portfolio resilience under adverse market conditions, such as economic shocks, regulatory changes, or natural disasters. LTF renders further resilience to its portfolio by incorporating forward-looking loss estimates under the Expected Credit Loss (ECL) framework. Additionally, hindsighting and annual long- range planning play a critical role in refining risk assessment, ensuring that strategic decisions are informed by past learnings and future projections. The framework is further reinforced by its seamless integration with your Company’s strategic objectives. By aligning risk management with long-term goals such as sustainable growth, operational excellence, and market leadership, the framework ensures a proactive approach to identifying and mitigating potential risks. Key performance indicators are structured around risk-adjusted metrics, embedding risk considerations into the core of strategic decision-making and enabling a more resilient, informed growth. By embedding adaptability, rigorous oversight, and actionable insights, LTF’s framework transforms risk management into a proactive enabler of resilience and sustainable growth. Integrated Annual Report 2024-2564
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Risk Governance At LTF, risk governance forms the backbone of its operational framework, enabling your Company to anticipate, mitigate, and respond risks effectively through a structured, multi-layered approach. By leveraging a robust governance model, risks are identified early, managed proactively, and aligned with strategic objectives, fostering long-term resilience and growth. The governance structure, led by the Board of Directors and supported by sub-committees such as the Risk Management Committee (RMC), IT Steering Committee, Operations Risk Committee, Model Risk Management Committee and Asset Liability Management Committee (ALCO), provides comprehensive oversight of risks across all operations. Each committee is designed to address specific aspects of risk, such as liquidity & market risks, operational challenges, model risks, outsourcing risks, information security risk, etc while ensuring that risk is within your Company’s risk appetite. For further details about the roles of the Board-level Committee, the frequency of their meetings, and reporting mechanisms to the Board, please refer to the Corporate Governance Report. Aligned with the Lakshya 2026 roadmap, LTF’s governance framework is designed to translate strategy into actionable risk management practices. By reinforcing portfolio diversification, standardising oversight, and aligning risk appetite with long-term objectives, the framework directly supports the vision of sustainable growth. Tailored governance policies and cross- functional collaboration ensure that emerging risks are managed with agility, while operational controls are strengthened to enable seamless execution of your Company’s strategic roadmap. Key advancements in FY25 include: media, corporate ethics, regulatory compliance, and staff conduct. The RRWG is mandated to meet quarterly to review key risk indicators of reputational risk, reporting findings to the Risk Management Committee and the Board of Directors to ensure continuous oversight. Reputational Risk Management Aligned with the Board approved Risk Management Policy, the Reputational Risk Management framework was operationalised starting April 1, 2025, proactively addressing potential threats to stakeholder trust. Overseen by the Reputational Risk Working Group (RRWG), comprising key leadership, the framework monitors risks from social I II Operational Risk Management (ORM) Operational Risk is defined as the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events. ORM attempts to reduce risks through the linear process of risk identification, risk assessment, measurement and mitigation, monitoring, and reporting. The Operational Risk Management Committee is a sub-committee of the Risk Management Committee, with the objective of providing guidance, review, monitoring, and implementation of prudent Operational Risk Management practices. The meeting of the Committee is held at periodic intervals. The minutes of the meeting are documented and presented to the Risk Management Committee. Corporate Overview Statutory Reports Financial Statements L&T Finance 65
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Third-Party Risk Management (TPRM) The TPRM framework mitigates risks arising from outsourced vendors through rigorous on-site inspections and robust data-security protocols. Oversight begins with the Board of Directors, with the Outsourcing Management Committee meeting biannually to approve and enforce policies. The Risk Management Committee (RMC) then reviews MORC’s inputs and provides further guidance. An onboarding team, in collaboration with key stakeholders, conducts thorough due diligence—evaluating vendors on financial, operational, and IT security parameters—and secures legally binding contracts. Continuous monitoring is achieved via periodic reviews, field visits, and training, with renewed due diligence at contract expiry and clearly defined processes for issuing advisories or executing terminations as needed. Model Risk Management (MRM) The MRM framework ensures the integrity and reliability of risk models to support sound decision-making. It starts with the Board of Directors setting overall risk policies, followed by the Risk Management Committee formulating and reviewing strategies. A dedicated Model Risk Management Committee monitors model risks, while the Model Risk Department conducts regular reviews in accordance with the established policy. Meeting at least once every six months, the framework emphasises policy updates, the approval of key performance indicators, and coordination with Internal Audit on risk observations. The Chief Risk Officer oversees implementation and periodic assessments, while the MRM team secures necessary resources, refines risk methodologies, and directs corrective actions for identified model weaknesses. and targeted lending decisions while significantly reducing default risks. Building on these advancements, your Company has also incorporated real-time analytics, risk-based pricing, and calibrated disbursement strategies across business verticals. These enhancements further reinforce governance efforts by optimising decision-making, strengthening risk controls, and ensuring operational efficiency while maintaining your Company’s risk appetite. Product/Process Approval Group (PAG) The Process Approval Group (PAG) was established in response to the increasing complexity of operations and the need for a structured approach to process governance. As a governing body comprising key stakeholders, PAG ensures the standardisation, oversight, and continuous refinement of critical processes across your Company. By streamlining workflows, eliminating redundancies, and enhancing decision-making efficiency, PAG strengthens operational control while fostering agility in execution. Its role extends beyond compliance, actively driving process improvements that enhance customer experience and align with your Company’s strategic objectives. IV V Cyclops Risk Engine Project Cyclops, the AI-driven digital credit engine, aims to strengthen credit risk assessment by delivering real-time, data-driven insights. Leveraging advanced machine learning algorithms and big data analytics, Cyclops streamlines the entire credit lifecycle—from origination and underwriting to continuous risk monitoring. This innovative platform integrates seamlessly with existing systems and utilises alternative data sources alongside historical performance metrics to optimise credit evaluations, enabling precise risk categorisation III Integrated Annual Report 2024-2566
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Responsibilities of PAG Composition of PAG For launch of new products or its variants, PAG comprises key stakeholders and representatives from various departments, ensuring a well-rounded evaluation of critical initiatives. These include: Department heads or designated contacts from cross-functional groups such as Product, Credit, Compliance, Operations Risk, Business Operations, IT/Digital, RCU, Retail Risk, Accounts, Infosec, Legal, and Compliance, when necessary. Subject experts from relevant internal units are included on a need-to-consult basis. Standardisation of Processes Ensures standardisation of processes across products, departments, and functions, wherever feasible. Approval Authority Provides approvals for all process, workflow, and system- related changes (projects), whether creation, modification, migration, or termination. Project Oversight Oversee project collaboration and plug identified gaps. informed, cross-functional decision-making. Key Highlights of PAG Approved critical process and system changes aimed at enhancing operational efficiency, streamlining workflows, and mitigating risks. Introduced inter-departmental workflows to reduce redundancies while maintaining stringent controls. Implemented mandatory system controls to address recurring risks across multiple product categories, reinforcing consistency in risk management. PAG convenes regularly to address emergent challenges, within your Company’s established risk appetite and overseeing launch of new products. Evolving the PAG Framework for Future Readiness To enhance product governance and process efficiency, the PAG framework has been expanded into the Product/Process Approval Group, reinforcing its role in innovation and compliance. A structured approval process ensures seamless product integration, while strengthened stakeholder involvement enables Every development, modification, or revision is thoroughly scrutinised by PAG to ensure adherence to predefined benchmarks and alignment with strategic imperatives prior to execution. Corporate Overview Statutory Reports Financial Statements L&T Finance 67
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Enterprise Risk Management (ERM) Framework Enables the identification and management of diverse risks across all business domains, maintaining risks within acceptable thresholds. Risk Appetite Statement Establishes clear parameters, cascading limits across business lines and risk categories, ensuring alignment with strategic objectives. Prudent Lending and Asset Quality Promotes systems and procedures for acquiring quality assets while exploring new business opportunities responsibly. Monitoring and Mitigation Uses Early Warning Signals (EWS), periodic reviews, and stress testing to address operational, liquidity, and market risks effectively. Aligned with Lakshya 2026, your Company’s risk management framework has been enhanced to address emerging risks such as fraud, cyber threats, climate-related vulnerabilities, and model risks. By integrating these evolving risk factors, the framework ensures a forward-looking approach that strengthens resilience in a dynamic business environment. Furthermore, the updated framework systematically cascades risk appetite limits across various product segments, ensuring that risk-taking aligns with business objectives while maintaining flexibility to adapt to changing market conditions and customer needs. Risk Management Process Your Company’s dynamic risk management framework provides end-to-end visibility into risks and corresponding mitigation strategies, ensuring resilience and alignment with its strategic objectives of sustainable growth, operational stability, and market leadership. The risk management process follows four core steps: Identification, Measurement, Prioritisation, and Mitigation The key pillars of this framework include: Risk Awareness Training Your Company conducts regular training sessions to embed a strong risk-aware mindset across all levels of the organisation. The programme has evolved to incorporate interactive, case- study-driven modules that equip employees with real-world tools for risk management. Virtual reality simulations have been added to enhance interaction and knowledge retention. All employees are mandated to undergo training on critical areas like cybersecurity, and operational challenges, ensuring full-scale organisational awareness and readiness. Advanced leadership workshops focus on strategic risk identification and mitigation, strategically aligned with the Lakshya 2026 framework. Integrated Annual Report 2024-2568
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Enhanced Communication Channels Your Company continues to enhance its risk reporting capabilities, enabling employees to flag potential risks for swift identification and response. Automated alerts help prioritise risks based on severity, ensuring timely intervention. A centralised risk database strengthens tracking, analysis, and data- driven mitigation, fostering transparency, accountability, and stronger risk governance. Monthly newsletters and team briefings continue to provide essential updates on evolving risks, new Standard Operating Continuous Monitoring and Improvement Your Company has implemented dashboards for tracking of Key Risk Indicators (KRIs), enabling agile responses to emerging threats. SOPs undergo annual reviews, with iterative updates to reflect evolving market conditions and operational priorities. Enhanced Root Cause Analysis (RCA) initiatives with dedicated cross-functional teams ensure that operational failures are systematically addressed. Corrective Action and Preventive Procedures (SOPs), and successful risk mitigation strategies. These initiatives ensure continuous education and alignment with your Company’s risk framework. Regular cross-functional risk review meetings enhance collaboration and foster a collective sense of accountability among teams. Action (CAPA) plans are continuously monitored, ensuring sustained process improvements. Operational Risk Event & Loss Data reporting Policy define different kinds of operational risk events and provide rules for classifying, documenting, evaluating, reporting and booking of operational risk losses. Through the infusion of these strategies, your Company enhances its risk management capabilities and instils a culture of accountability, responsiveness, and robust resilience, aligning every effort with its strategic goals and stakeholder expectations. Effective Risk Culture A culture of strategic risk awareness drives LTF’s commitment to proactive risk management. By fostering strong leadership, delivering specialised training, and promoting cross-departmental collaboration, your Company equips its teams to efficiently identify and resolve risks, ensuring organisational stability. Principal strategies include: Corporate Overview Statutory Reports Financial Statements L&T Finance 69
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Broad Risk Framework Your Company operates within a dynamic business environment, requiring a robust risk management approach that encompasses a wide spectrum of risks. The broad risk framework provides a structured methodology to identify, assess, and mitigate potential threats across all operational and strategic functions. This framework integrates governance, analytics, and proactive controls to ensure resilience and business continuity. Below is an overview of the key risk categories managed by your Company. Credit Risk Credit Risk Market Risk Market Risk Operational Risk Operational Risk Other Risks Other Risks Default Risk Concentration Risk Client Industry Geography Interest Rate Liquidity Maturity Mismatch Currency/Forex Process People Information Technology Outsourcing Cybersecurity Legal Regulatory Reputational Strategic Political Climate Integrated Annual Report 2024-2570
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Risk Category Sub-Risk Mitigation Measures Capitals Impacted Credit Risk As a fundamental pillar of LTF’s risk management strategy, credit risk plays a crucial role in shaping your Company’s operations. It encompasses the risk of fi- nancial loss arising from a borrower’s failure to meet their financial commit- ments. To address this, LTF employs a dynamic and holistic credit risk management framework designed to promote portfolio resilience and maintain stability. Default Risk The risk of borrowers failing to meet their debt obligations, leading to financial losses. Leveraging Cyclops 3D analytics to assess borrower behaviour through multidimensional profiling, enabling proactive risk identification. Conducting periodic Early Warning Signals (EWS) reviews to identify potential defaulters and take corrective actions. Enhancing focus on secured lending to optimise risk exposure and minimise unsecured credit risk. Conducting periodic portfolio reviews to identify positive and negative trends and strengthening portfolio evaluation and monitoring frameworks to track financial health. Accessing geopolitical data, behavioural patterns, and credit history to refine credit assessment models. Concentration Risk (Client, Industry, Geography) Overexposure to a single borrower, industry, or geography, leading to increased vulnerability to sectoral downturns. Implementing diversification strategies to mitigate over-reliance on specific sectors, clients, or geographies, thereby reducing systemic vulnerabilities. Deploying tailored risk controls for industry and geographic exposure to ensure balanced portfolio composition. Setting product-wise limits using earnings that are at risk, using stressed levels of observed credit loss factors. Financial Capital Human Capital Social and Relationship Capital Manufactured and Intellectual Capital Natural Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 71
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Risk Category Sub-Risk Mitigation Measures Capitals Impacted Market Risk Risks associated with fluctuations in interest rates, liquidity, foreign exchange rates, and securities prices, potentially impacting earnings and capital. Interest Rate Risk Exposure to fluctuations in interest rates, impacting borrowing costs and investment returns. Monitoring and managing risks through ALCO as per Board-approved Asset Liability Management Policy to maintain financial stability. Establishing the Asset Pricing Committee (APC) to ensure risk- adjusted pricing strategies that align with market conditions. Using scenario analysis to assess impact on capital adequacy and profitability, enabling informed decision-making. Liquidity Risk The risk of not having sufficient liquid assets to meet financial obligations. Maintaining a favourable liquidity gap to ensure sufficient cash reserves. Establishing Contingency Funding Plans to address unexpected funding disruptions and maintain operational continuity. Maturity Mismatch Mismatch between asset and liability maturities, leading to liquidity stress. Proactive monitoring of asset-liability mismatches to prevent liquidity crises. Ensuring cash flow alignment with financial obligations to sustain solvency. Financial Capital Human Capital Social and Relationship Capital Manufactured and Intellectual Capital Natural Capital Integrated Annual Report 2024-2572
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Risk Category Sub-Risk Mitigation Measures Capitals Impacted Operational Risk Risks resulting from inadequate or failed internal processes, people, systems, or external events. This includes risks from fraud, natural disasters, or IT failures. Process Risk Inefficiencies, errors, or failures in internal processes that could impact business operations. Regular updates to SOPs and operational risk metrics to enhance process efficiency. Implementing the hindsighting process for real-time risk assessment and error rectification. Conducting internal audits and branch evaluations to strengthen internal controls. People Risk Risks arising from human errors, lack of expertise, or inadequate training. Establishing a Process Approval Group for operational changes, ensuring structured oversight. Implementing employee training initiatives such as ‘Gurukul’ to promote risk awareness and competency development. Information & Technology Risk Risks related to IT failures, cybersecurity threats, and system disruptions. Enhancing digitalisation and automation to streamline processes and reduce manual errors. Using Information Security Manual to mitigate cybersecurity threats and ensure data protection. Outsourcing Risk Dependence on third-party service providers leading to operational vulnerabilities. Strengthening third-party risk management and compliance frameworks to minimise external dependency. Financial Capital Human Capital Social and Relationship Capital Manufactured and Intellectual Capital Natural Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 73
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Risk Category Sub-Risk Mitigation Measures Capitals Impacted Other Risks Legal Risk Exposure to legal disputes, non-compliance, and contractual obligations. Conducting regular legal reviews to ensure contractual and regulatory compliance, mitigating exposure to legal disputes. Updating policies in alignment with fraud and operational risk standards to enhance regulatory adherence. Regulatory Risk Risk arising from non-compliance with evolving laws and regulations. Establishing a dedicated Compliance Department to oversee adherence to evolving regulations. Reviewing and revising operational manuals regularly to align with changing legal landscapes. Conducting independent compliance reviews to ensure accountability and governance. Reputational Risk Negative publicity or stakeholder perception impacting brand value. Implementing reputation risk frameworks with regular assessments to proactively address potential threats. Deploying stakeholder-specific communication strategies to maintain trust and brand integrity. Strategic & Political Risk Risks from policy changes, regulatory shifts, or political instability affecting business operations. Continuously aligning market and policy strategies to anticipate and mitigate regulatory or political disruptions. Financial Capital Human Capital Social and Relationship Capital Manufactured and Intellectual Capital Natural Capital Integrated Annual Report 2024-2574
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Risk Category Sub-Risk Mitigation Measures Capitals Impacted Cyber Risk Threats from cyberattacks, data breaches, and fraud. Implementing network micro- segmentation for traffic visibility, malware containment, and unauthorised access prevention. Enhancing Application Security to minimise vulnerabilities. Assessing Data Security Posture (DSPM) for real-time risk evaluation and access control. Ensuring ISO 27701 Certification & Compliance for regulatory adherence and data protection. Preventing phishing and unauthorised emails through Email Security (DMARC). Detecting threats proactively, blocking malicious sites, suspicious requests, and phishing, fraud, and crypto-mining attempts. Deploying Advanced Cybersecurity Architecture with multi-tier protection and malware defence. Strengthening Third-Party Risk Management & Data Security Controls for robust protection. Fraud Risk Internal and external fraudulent activities leading to financial and reputational losses. Implementing fraud detection systems to identify suspicious activities. Employing a 360-degree monitoring framework to enhance fraud prevention mechanisms. Conducting employee awareness training to strengthen internal fraud controls. Financial Capital Human Capital Social and Relationship Capital Manufactured and Intellectual Capital Natural Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 75
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Risk Category Sub-Risk Mitigation Measures Capitals Impacted Climate Risk Impact of climate change on financial stability, business operations, and asset quality. Conducting climate-linked peril- based heat risk mapping and climate risk scenario analysis. Analysing rainfall deviations, reservoir levels, and agricultural practices. Integrating climate-related risks into ICAAP frameworks to enhance financial planning and sustainability. Your Company’s Economic Affairs Group provides valuable inputs on environmental and social factors that impact the portfolio during the monthly ALCO Meetings and to the Board. Financial Capital Human Capital Social and Relationship Capital Manufactured and Intellectual Capital Natural Capital Integrated Annual Report 2024-2576
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Adopting a systematic method for identifying and managing Environmental, Social, and Governance (ESG) risks, your Company ensures these factors are embedded within its holistic risk management framework. This seamless integration enhances strategic priorities such as portfolio strength and adaptability to market dynamics while taking climate change in account. As part of this approach, LTF has conducted a comprehensive business impact study in FY25 to assess potential challenges and develop targeted strategies for mitigating risks, ensuring business resilience and sustainability. Your Company undertakes specific initiatives to monitor regional weather shifts, deviations in rainfall, and agricultural practices, with a focus on mitigating impacts on agricultural and rural lending. Your Company aligns with TCFD principles and in FY25 conducted climate- linked peril-based heat risk mapping and climate risk scenario analysis. Beyond the environmental domain, your Company places emphasis on social engagement like employee engagement, customer satisfaction, community development and inclusivity, alongside governance risks related to regulatory compliance and maintaining ethical third-party standards. The ESG team conducts health and safety assessments, including ISO 45001, to identify and mitigate risks, creating a safer work environment. Further, your Company has also established a Sustainability Steering Council (SSC) that ensures compliance and strengthening of the ESG Governance. Governance mechanisms, led by a dedicated ESG team, ensure accountability and tracking progress through various metrics. These metrics include carbon footprint reduction, social impact benchmarks, and adherence to global sustainability standards. Through these proactive measures, your Company reinforces its commitment to embedding ESG considerations into its operations, laying the foundation for sustained and responsible growth. ESG-Related Risks Corporate Overview Statutory Reports Financial Statements L&T Finance 77
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MANAGEMENT DISCUSSION AND ANALYSIS Integrated Annual Report 2024-2578
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Macroeconomic Review Revisions in India’s GDP Growth Outlook for FY25 The global economy exhibited uneven yet steady growth across regions in 2024. Cyclical imbalances from post covid resurgence in 2022 and 2023, eased since the beginning of 2024, leading to a better alignment of economic activity with potential output in major economies. This adjustment also brought inflation rates across countries closer to target levels and contributed to lower global inflation. Moreover, despite a sharp and synchronised tightening of monetary policy around the world, the global economy remained unusually resilient throughout the disinflationary process, avoiding a global recession. While the global decline in inflation was a major milestone in 2024, downside risks to global growth started to emerge towards the end of the year and now dominate the outlook for 2025. Heightened uncertainties surrounding tariffs outcomes, following the US election verdict in Nov’24, and its repercussion on global trade shroud the prospects of global economy. Economic policy uncertainty has increased sharply, especially on the trade and fiscal fronts and various risks viz; escalation in regional conflicts, monetary policy remaining tight for too long, possible resurgence of financial market volatility and the continued ratcheting up of protectionist policies dominate business sentiments across the globe. Against the uncertain global economic backdrop, India displayed steady economic growth supported by agricultural and services sector activities, with rural demand improving on the back During H1-FY25, growth in real GDP (Gross Domestic Product) turned out to be much lower than anticipated, largely due to lower government spending and extreme heatwave conditions. In Q2-FY25, real GDP growth slowed to a seven- quarter low of 5.6%, led mainly by a substantial deceleration in industrial growth due to subdued performance of manufacturing companies, contraction in mining activity and lower electricity demand. In the subsequent quarter, however, growth in real GDP recovered to 6.2% supported by robust rural demand and increased government expenditure. The second advance estimate of the National Statistical Office puts IMF RBI Fitch S&P Apr'24 7.00% Jun'24 Apr'24 6.80% Jul'24 7.00% Oct'24 7.00% Jan'25 6.50% Mar'24 7.00% Jun'24 7.20% Sep'24 7.00% Dec'24 6.40% Jun'24 6.80% Sept'24 6.80% Nov'24 6.80% Mar'25 6.70% Oct'24 7.20% Aug'24 7.20% 7.20% Dec'24 6.60% Apr'25 Mar'25 6.50% 6.30% *As per the RBI Governor’s media interactions of record Kharif production and favourable agro-climatic conditions. Domestic macro fundamentals continued to remain resilient as astute fiscal management, coordinated monetary policy and strong external balances helped steer away the impact of extreme weather conditions and high inflationary levels in the first half of 2024. Despite slower growth in first half of the year, quick recovery in the second half put India on track to remain the fastest-growing major economy in the world in FY25. Corporate Overview Statutory Reports Financial Statements L&T Finance 79
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India’s real GDP growth at 6.5% for FY25 (compared to 9.2% in FY24), reflecting strong recovery in H2-FY25. On the demand side, private consumption expenditure is estimated to grow by 7.6% in FY25 driven by a rebound in rural demand and pick up in government expenditure in H2-FY25. While rural consumption demand remained resilient, considerable slack in urban demand was observed due to factors such as high interest rates, elevated food inflation, subdued growth in inflation-adjusted salary levels, elevated unemployment levels and preemptive regulation-induced slowdown in retail credit growth. On the supply side, real GVA (Gross Value Added) is estimated to grow by 6.4% in FY25 (vs. 8.6% in FY24), mainly driven by strong recovery in the agriculture & allied sector and resilient services sector while growth in industrial sector moderated. Retail inflation based on the Consumer Price Index (CPI) peaked at 6.21% in Oct'24 and softened in subsequent months to reach 3.34% in Mar'25 as food price pressures softened. The contribution of food inflation to headline CPI has significantly risen over the past three years, from 34% in FY22 to 46% in FY23 to 59% in FY24 and 65% in FY25, reflecting grim repercussion of climate risks. For instance, the percentage of heatwave days in India rose to 18% in 2022-2024 vs 5% in 2020-2022 which affected crop yields. Core inflation continues to remain below 4% despite significant uptick from its record-low levels of 3.12% in the month of May'24. As inflationary pressures receded, the Monetary Policy Committee (MPC) of the RBI unanimously decided to reduce policy repo rate by 25 basis points to 6.25% in Feb'25, after a gap of almost five years. The MPC recognised the moderation in retail inflation in FY25 and its benign outlook for FY26 along with moderation in GDP growth. On the fiscal front, the Central Government reaffirmed its commitment to fiscal discipline by achieving better-than-budgeted fiscal deficit to GDP ratio of 4.8% for FY25 mainly due to lower than budgeted capital expenditure. The quality of public expenditure, however, continued to improve in FY25 as growth in capital expenditure (7.3%) outpaced growth in revenue expenditure (5.8%). The market borrowings in FY25 (both gross and net) was lower than the previous year which helped narrowing public debt to GDP ratio by 160 bps to 57.1% in FY25. Indian rupee, following a stable H1-FY25, depreciated by 2.3% in H2-FY25 due to strengthening of dollar vis-à-vis other currencies. Moreover, foreign capital outflows (due to tariff-tantrum induced global trade uncertainty and lower-than-expected quarterly earnings performance by domestic corporates) exacerbated the pressure on Indian rupee. RBI’s intervention to curb the excess volatility in rupee- dollar exchange rate led to depletion in foreign exchange reserves by about US $ 40 billion in H2-FY25 (in contrast to accretion of US $ 60 billion in H1-FY25). Nevertheless, India’s foreign currency reserves continue to remain adequate as reflected in the comfortable import cover ratio of about 11 months. Outlook for FY26 The International Monetary Fund (IMF) projects global economy to grow at 2.8% in CY2025, significantly lower than the historical (2000-19) average of 3.7%, largely due to increasing trade tensions and surge in policy uncertainty. Weaker global economic growth could lead to slowdown in global trade, investment, and overall economic activity, potentially impacting business sentiments, employment conditions and consumer spending. With growth varying across economies and last-mile disinflation proving sticky, global central banks are likely to take varying paths of monetary policy. The global trade outlook for CY25 remains uncertain, despite global trade volume registering 3.7% on- year growth in 2024. Escalating trade tensions and a heightened wave of uncertainty around the scope and intensity of tariffs will test the resilience of the global economy. Persistent policy uncertainty could drive structural adjustments in global value chains and its adverse impact could affect economies beyond the US amid ongoing geopolitical realignments. Against the backdrop of turbulent global environment, the Indian economy is expected to continue to demonstrate resilience in FY26 supported by robust sectoral performance and improving consumption trends. The RBI projects 6.5% growth in India’s real GDP in FY26 supported by strong momentum in domestic demand amid cooling food inflation, tax benefits and lower borrowing costs. Integrated Annual Report 2024-2580
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External factors such as rising US tariffs and global trade pushback will be the headwinds. The uncertain and volatile global environment could further defer the much-anticipated revival in private capex. On the inflation front, the RBI projects retail inflation at 4% in FY26 which will provide policy space for further rate cuts to support economic activity. Second advance estimates of agricultural production projects kharif and rabi food grain output to increase by 6.8% and Projections for India's GDP Growth in FY26 IMF World Bank OECD RBI Fitch Moody’s* S&P 6.20% 6.30% 6.40% 6.50% 6.50% 6.10% 6.50% *CY2025 On the credit front, FY25 was a mixed picture. While lenders benefitted from improved profitability and stable asset quality, credit growth was tempered by cautious credit expansion, driven by stricter regulatory measures to prevent overheating in certain lending segments. Credit uptake among new-to-credit consumers and towards consumption-led credit products witnessed a sharp decline in loan originations as regulatory forbearance turned cautious in the first half of the year. Towards the end of the year however, much of the caution has started to fade as economic impulses are getting stronger. India’s financial system remains stable and prepared for potential global challenges in Fiscal Year 2025- 2026. RBI’s Financial Stability Report 2.8%, respectively which suggests a benign outlook for food inflation. Moreover, according to the IMD (India Meteorological Department), south-west monsoon is expected to be ‘above-normal’ in 2025 which will support reigning in inflation. Upside risk to inflation, however, could emanate from global uncertainties leading to pressure on Rupee and imported inflation. The Central Government envisages to contain fiscal deficit to GDP ratio at 4.4% in FY26, 40 bps lower than the previous year and reduce the debt to GDP ratio from 57.1% in FY25 to 56% in FY26. While prudently balancing fiscal consolidation and growth objectives, the Union Budget for FY26 has announced several measures under four engines of growth – agriculture, MSMEs, investment and exports. The tax cuts on individuals as announced in the Union Budget for FY26 are set to increase disposable income, boosting consumer spending and improving their loan eligibility which is expected to drive demand for credit. notes that Indian banks have achieved a significant milestone, with gross non- performing assets (NPAs) declining to a 12-year low of 2.6% as of September 2024. This improvement is attributed to positive recovery efforts, the strategic write-off of legacy bad loans, and a slowdown in the accumulation of new bad assets. The Report also indicates progress in critical areas such as asset quality, regulatory compliance, and the robustness of non-banking entities, while highlighting areas requiring attention, such as liquidity management and macroeconomic risks. The Report makes notes on strengthening of the balance sheets of non-banking financial companies (NBFCs) as well. It states that stress tests conducted by the RBI reveal that even under high-risk scenarios, NBFCs would retain capital levels well above the required minimum, showcasing their improved financial resilience. In Feb’25, the RBI has also reversed its Nov’23 decision on higher risk weights on bank lending to NBFCs. This is expected to enhance funding access of NBFCs from banks. Overall, the NBFC sector remained healthy with sizable capital buffers (CRAR stood at 26.1% in September, 2024), robust interest margins and earnings (NIM at 5.1% and RoA at 2.9%) and improving asset quality (GNPA at 3.4%). The RBI’s policy measures in Q4-FY25 suggest a more balanced regulatory approach, fostering growth while ensuring compliance. Furthermore, RBI’s commitment to maintain sufficient systemic liquidity could expedite transmission of policy rate cuts and help the NBFC sector to reduce their overall cost of funds. Corporate Overview Statutory Reports Financial Statements L&T Finance 81
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2026 LAKSHYA G ALS RESPONSIBLE GROWTH THROUGH FY25 Retailisation Retail Growth Consol Asset Quality Consol RoA Integrated Annual Report 2024-2582
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Now, having achieved Lakshya 2026 goals at Retail level, we are looking at convergence of goals at consolidated level LTF Consolidated Lakshya 2026 Goals (Consolidated) Year 3-FY25 (Consolidated) Retailisation Retail Growth Consol Asset Quality Consol RoA >95% 97% >25% CAGR 19% Y-o-Y CAGR (Q4FY22 - Q4FY25): 28% GS3 <3% NS3 <1% GS3 3.29% NS3 0.97% 2.8%-3% Q4FY25 2.22% FY25 2.44% Corporate Overview Statutory Reports Financial Statements L&T Finance 83
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5-PILLAR STRATEGY TO ACHIEVING LAKSHYA GOALS AT CONSOLIDATED LEVEL Enhancing Customer Acquisition Sharpening Credit Underwriting Implementing Futuristic Digital Architecture Heightened Brand Visibility Capability Building Broadening customer funnel and velocity while increasing throughput Harvesting the customer and increasing cross-sell, while keeping risk under control Launching contiguous product offerings Building a self- learning credit engine based on bureau, account aggregator and alternate data signals to make underwriting more robust Optimising digital journeys to eliminate chokepoints and provide a superlative experience to customers In-house engineering for enhanced time to market Enhancing brand presence across channels Building salience and recall for the brand ‘L&T Finance’ Focused enhancement and optimisation of talent pool in: Artificial Intelligence / Machine Learning Credit and Risk Tech and Engineering 1 2 3 4 5 Granular Execution on the 5-Pillar Strategy in FY25 FY25 witnessed a granular implementation of 5-Pillar strategy on all accounts. The pillars that witnessed focused execution were deepening credit underwriting through execution of ‘Project Cyclops’, the three dimensional credit underwriting engine and launch of one of its kind portfolio management engine ‘Project Nostradamus’ and other nuanced policy and process controls. The implementing futuristic digital architecture pillar witnessed the launch of various loan origination and partnership journeys while ensuring best-in-class system uptime. Heightened brand visibility became a reality through various brand and product campaigns launched along with the launch of one of its kind AI conference R.AI.SE’24. Last but not the least, capability building was at the heart of the efforts through the creation of the Regional Business Head structure and a 3-tier compliance structure. Integrated Annual Report 2024-2584
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Pillar 1: Enhancing Customer Acquisition 1 2 3 4 5 Given the dynamic and volatile credit environment that prevailed through FY25, your Company focused on responsible growth by calibrating customer acquisition while optimising channel management. This is evident from the new customer acquisition and sourcing strategy that has been followed throughout the year. In the Rural Group Loans and Microfinance segment LTF followed a measured approach in enhancing its geographic presence due to the overleveraging of customers in the industry. On the Two- Wheeler and Farm Equipment Finance front, your Company followed a conscious channel rationalisation effort to enhance customer quality and sourcing. On the Personal Loan front, customer sourcing and distribution was strengthened multifold through tie-ups with big tech companies. Lastly, on the Home Loan and LAP front, your Company concentrated on improving the developer channel for sourcing Home Loans, while in SME Finance LTF focused on increasing the sourcing through direct channels. Rural and Urban Customer Funnels By Increasing Distribution Footprint Rural Group Loans and MFI New Villages Activated (Nos.) New Customer Acquisition (No. in lakh) Two-Wheeler Finance Active Sourcing Points (Nos.) Farm Equipment Finance Active Sourcing Points (Nos.) Personal Loans Active DSAs and E-Aggregators (Nos.) Home Loan/LAP Active Sourcing Points (Nos.) Expanding Reach Customer Acquisition 21,832 22,743 19,975 25,401 11,178 10,438 9,768 8,425 2,433 2,316 2,512 2,355 43 35 49 55 336 371 389 385 6.7 6.6 5.8 5.2 Q1FY25 Q2FY25 Q3FY25 Q4FY25 Rural Funnel Urban Funnel Attracting New Customers Towards creating a deeper customer and distribution footprint Corporate Overview Statutory Reports Financial Statements L&T Finance 85
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Rural and Urban Customer Database Active Customers: 92 lakh+ ~0.9 Cr~1.7 Cr Cross-Sell and Up-Sell Total Retail Repeat Disbursement Share (Count) Total Retail Repeat Disbursement Share (Value) 46% 43% 43% 49% 36% 35% 32% 36% Q1FY24 Q2FY25 Q3FY25 Q4FY25 Robust Cross-sell / Up-sell momentum maintained throughout FY24 59% 53% 56% 60% 71% 66% 69% 73% 19% 39% 22% 34% 63% 61% 49% 40% Rural Group Loans & MFI Repeat % (Count) Rural Group Loans & MFI Repeat % (Value) Farm Equipment Finance Repeat % (Value) Personal Loans to Existing Customers % (Value) Rural Funnel Urban Funnel Leveraging ~2.6 Cr Database Integrated Annual Report 2024-2586
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Operationalised ‘Project Cyclops’ in Two-Wheeler and Farm Equipment Finance Pillar 2: Sharpening Credit Underwriting 1 2 3 4 5 The highlight of FY25 has been the deployment of LTF’s proprietary digital credit engine, ‘Project Cyclops’, the first of its kind engine in the industry which facilitates a thorough credit underwriting on a multi-dimensional axis. The Beta version of Project Cyclops was launched in July 2024 in the Two-Wheeler Finance business and implemented 100% during the course of the year. It was also implemented on a pilot basis in the Farm Equipment Finance business. The AI-ML powered underwriting engine facilitates an in-depth assessment of the customer’s potential by ingesting bureau, account aggregator and alternate trust signals at scale using ML-based ensemble scorecards, built after an extensive data analysis and overlay of historical credit performance data. With ‘Project Cyclops’, LTF’s underwriting capabilities have become more comprehensive and accurate, enabling it to make faster and more informed decisions at scale. Furthermore, your Company has commenced work on ‘Project Nostradamus’, a first of its kind AI-driven automated portfolio management engine which is expected to transform LTF from a reactive portfolio management paradigm to a proactive portfolio management paradigm. The key features of this project are the ability to push data at scale, to process data at low latency speeds, and to develop the ability to predict, risk model and run simulations in real time. The beta version of this new technology engine is expected to get released in Q2FY26. LTF remains dedicated to driving innovation and enhancing its offerings to better serve its customers. Existing to Credit ETCBureau Banking Salaried / Non- Salaried Account Aggregator (AA) Payment Transactions Trust Scores Thin File / Thick File ETC + AA ETC + Trust Signals NTC + AA NTC + Trust Signals NTC + Micro Geography Satellite Data Trust Signals Asset / Customer Location Micro Geography Historic Performance NTC KYC Image / Video KYC Image / Video External Affluency Index Raw Data Pre-processed Data Volume handling capacity 10x+ High-speed transaction processing – 100+ TPS Handle disparate data sources Next-Gen Omni-Product and Omni-Customer Underwriting Engine ML Model BRE NTC: New-to-Credit | ETC: Existing-to-Credit Corporate Overview Statutory Reports Financial Statements L&T Finance 87
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Open API & Microservice-based Architecture Branch FLS/DSA Call Centre App Social Media Website External Data Sources Customer Consent & Verification LEARNING LAYER DATA INTELLIGENCE CUSTOMER DATA REPOSITORY Product Technology Stack Acquisition Layer Bureau, AA, Trust Signals Project Cyclops Credit Intelligence Customer Intelligence Portfolio Layer Unified Customer Experience Information Security Nostradamus PLANET Service Intelligence Portfolio Intelligence Building Technology Infrastructure to Drive Variety, Volume, Velocity, and Veracity Pillar 3: Implementing Futuristic Digital Architecture 1 2 3 4 5 LTF is committed to becoming one of the pre-eminent technology-driven lenders in the country. During FY25, LTF launched a revamped customer portal and the next generation of PLANET App, which is aimed at enhancing the experience of the customers. While certain journeys were launched like DIY Home Loan, others were revamped like Rural Business Finance sourcing app. Progress has been made in optimising cloud usage costs and building robust disaster recovery infrastructure, alongside beefing up the cybersecurity capabilities. The organisation has embarked on the task of housing the entire Core IT, Data Sciences & Operations capabilities in an integrated facility in Navi Mumbai. LTF will constantly harness cutting-edge technology to simultaneously enhance the customer experience as well as improving the operational metrics. External Marketplaces Engineering for Tomorrow - Future Tech Landscape Integrated Annual Report 2024-2588
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Pillar 4: Heightened Brand Visibility 1 2 3 4 5 In FY25, your Company augmented its brand visibility to enhance customer mindshare by building its presence through targeted product campaigns that covered high traffic customer points like airports and in-flight advertising on the urban side and wall paintings and melas on the rural side. LTF’s Targeted Marketing Campaigns Integrated Marketing Campaign: LTF launched its first integrated marketing campaign for the Housing Finance business ‘The Complete Home Loan’, which generated sizeable leads and aided in overall lift in awareness of the brand. The integrated Home Décor Finance proposition is a first of its kind in the industry and addresses a whitespace in the home buying process for the customers. Brand Ambassador: Your Company is pleased to inform you that it has onboarded Mr. Jasprit Bumrah as the brand ambassador of L&T Finance. Mr. Bumrah is an eminent cricketer and captain of India’s One Day International Cricket team. Going forward, there will be extensive marketing campaigns involving him, LTF products and customers. R.AI.SE 2024: Another marquee strategic initiative envisioned and executed successfully from the stable of LTF was R.AI.SE’24, India’s premier AI-focussed event for the BFSI sector. Held on November 26, 2024 at the Jio World Convention centre under the theme of 'Re-Imagining Financial Services with AI,' the event was inaugurated by L&T Group Chairman Mr. S.N. Subrahmanyan. Also, present were L&T Group's President, Whole-Time Director and Group CFO Mr. R. Shankar Raman along with the MD & CEO of LTF Mr. Sudipta Roy. The conference featured 52 guest speakers in enlightening panel discussions, use cases, and real-world applications of AI in the BFSI sector, along with masterclass sessions. This event saw more than 8,000 registrations and reached an engagement level of 3 lakh during the course of three days. By gathering Al leaders from regulatory bodies, unicorn start-ups, deep tech companies, and L&T Group companies together, R.AI.SE’ 24 shone the spotlight on the challenges and promises of AI applicability and its use in enhancing output. This bespoke event is expected to become an annual highlight going forward. Other Key Events: Apart from this, LTF participated in the Global Fintech Fest 2024, and the India Bike Week, 2024 where the unveiling of the LTF Zoom Two-Wheeler Loans took place. Brand Ambassador of L&T Finance BRAND AMBASSADOR Mr. Jasprit Bumrah Corporate Overview Statutory Reports Financial Statements L&T Finance 89
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LTFINANCE.COM Dreams Let Your soar high with L&T Finance Personal Loans Launched the 'Complete Home Loan and Personal Loan' Campaigns Sapno Ki DiwaliGlobal Fintech Fest Two-Wheeler 1st Edition of our Marquee AI Event ‘R.AI.SE’ Integrated Annual Report 2024-2590
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Pillar 5: Capability Building 1 2 3 4 5 On the capability building front, your Company has further strengthened the Risk and Compliance culture in the organisation by creating a 3-tier compliance structure i.e. a Central compliance, a Business compliance and a Regional compliance structure, reporting to the Chief Compliance Officer. To ensure the robustness of the compliance framework, a separate compliance testing team has been created for continuous monitoring and testing. Strengthening the Risk and Compliance Culture Continue to invest in capability building with clear focus on productivity enhancement 3-Tier Compliance Structure reporting to Chief Compliance Officer Separate central compliance testing team for continuous monitoring Robust oversight mechanism with Compliance-change approach Enterprise-wide Compliance Business Compliance Regional Compliance H.O. group compliance team Business compliance team for business and support function compliance Regional compliance team for on-ground compliance Further, in-line with the objective of boosting the human capital with an execution bias towards various initiatives, the Regional Business Head structure was operationalised in FY25 to tap emerging market opportunities. This structural change is expected to provide more granular distribution & risk control on the ground, aid cross-sell, drive inter-business synergies and reduce response times. Four senior professionals from the banking sector have been onboarded in FY25 to transition L&T Finance to this structure. Corporate Overview Statutory Reports Financial Statements L&T Finance 91
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Implemented Regional Business Head structure Pilot of Model Branch in Madurai Chairman L&T Finance, Mr. S.N. Subrahmanyan's Visit to Model Branch in Madurai Initiatives towards becoming a more business and customer-centric organisation Moved from silo structure to matrix structure for granular and faster implementation of initiatives MD & CEO COO Chief Executives - Head Office Regional Business Heads Rural Business Finance Farmer Finance SME Finance During FY25, your Company also launched its first Model Branch in Madurai, Tamil Nadu, inaugurated by L&T Group Chairman Mr. S.N. Subrahmanyan, for elevated customer experience and brand visibility. LTF would replicate this templated design across all the new and existing identified branches. Standardising Branch Infrastructure North South East West Urban Finance Integrated Annual Report 2024-2592
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Launch of 270-degree feedback Introduction of Flexi-timing to ease commute to and from office Launch of Continuous Education Policy, ‘STRIDE’ – extending support for employee’s learning and growth L&T Finance is now Great Place To Work Employee Engagement Initiatives Corporate Overview Statutory Reports Financial Statements L&T Finance 93
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FINANCIAL RATIOS During the year under review, there were no significant changes (i.e. change of 25% or more as compared to FY24) in key financial ratios of the Company. Our Businesses Rural Group Loans & Micro Finance (JLG) Two-Wheeler Finance Micro LAP Home Loans and LAP Farm Equipment Finance Personal Loans Agri-Allied Finance SME Loans to Professionals & Traders (Including Supply Chain) Rural Business Finance SME Finance Urban Finance Farmer Finance PORTFOLIO MIX Rural Urban 44% 56% Integrated Annual Report 2024-2594
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Rural Group Loans & Micro Finance (JLG) Two-Wheeler Finance Farm Equipment Finance Retail Franchise & Right to Win Retail Digital Franchise Built Over 15 Years Granular and Extensive Distribution Network PORTFOLIO MIX Urban Rural DIVERSIFIED RETAIL NBFC PAN India Presence ~2,00,000 Villages 100+ Cities / Towns Leveraging ~2.6 Cr Customer Franchise for Cross-Sell 13,000+ Distribution Touch Points Optimised Digital Service & Distribution Delivery Platform Disclaimer: This map is a generalised illustration only for the ease of the reader to understand the locations and is not intended to be used for reference purposes. The representation of political boundaries and the names of geographical features/States do not necessarily reflect the actual position. The Company or any of its Directors, officers or employees cannot be held responsible for any misuse or misinterpretation of any information or design thereof. 56% 44% Corporate Overview Statutory Reports Financial Statements L&T Finance 95
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Retail Finance Businesses: Disbursements and Book for the past 5 years FY21 FY21 FY21 FY21 FY21 FY21 4,477 6,470 6,613 10,261 18,356 12,207 FY22 FY22 FY22 FY22 FY22 FY22 FY22 FY22 FY23 FY23 FY23 FY23 FY23 FY23 FY23 FY23 FY24 FY24 FY24 FY24 FY24 FY24 FY24 FY24 FY25 FY25 FY25 FY25 FY25 FY25 FY25 FY25 5,152 9,737 9,950 62 11,317 20,427 13,278 61 6,450 16,726 16,910 1,473 12,819 27,841 18,693 1,378 6,848 20,416 21,495 3,657 13,892 36,089 24,716 3,905 7,935 24,963 20,921 5,000 15,219 45,897 26,320 6,524 Disbursements Disbursements Disbursements Disbursements Book Book Book Book Farmer Finance Urban Finance Rural Business Finance SME Finance in ₹ Cr in ₹ Cr in ₹ Cr in ₹ Cr in ₹ Cr in ₹ Cr in ₹ Cr in ₹ Cr Integrated Annual Report 2024-2596
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Retail Finance In the Farmer Finance business, your Company endeavours to build products across the farmer lifecycle by addressing requirements across the agri value chain. Farm Equipment Finance Tractor sales experienced a revival in FY25 post witnessing a compression in FY24, due to good rainfall, higher reservoir levels, and unhindered agricultural activities. The healthy mandi arrivals and MSP prices for both Kharif and Rabi crops, along with ongoing government support programmes, continue to foster positive sentiment in rural areas. As a result, the domestic tractor industry witnessed a year-over-year growth of 8%, with approximately 940,000 units sold during the fiscal year. Your Company remains a leading farm equipment financier, driven by consistent disbursements and strong relationships with dealers and OEMs. In FY25, LTF financed nearly through a pilot of ‘Project Cyclops’, a first-of-its-kind underwriting engine based on alternate data sources like account aggregator, satellite-based land data, credit history & hyper local demographics. Additionally, integration of advanced services and features like real-time online fetching of land details, geospatial data, hyperlocal demographic data pull, decile- based customer profiling & video personal discussion with electronic mandate registration is expected to further improve sourcing quality and enhance customer onboarding experience thereby delivering industry-best TAT. LTF’s industry-leading asset quality and consistent collection efficiencies—above 91%—are the result of persistent and dedicated collection efforts, both on the field and through the call centres. These efforts are driven by strong analytics, which allow for effective segmentation and prioritisation of the portfolio, leading to effective and optimal utilisation of resources and intensities. Thus, LTF has ended the year with an overall disbursement of ₹ 7,427 Cr with 11% increase Y-o-Y aggregating to a book size of ₹ 14,957 Cr. Warehouse Receipting Finance Your Company expanded its product offerings with the introduction of Warehouse Receipting Finance couple of years back to address post-harvest needs within the agricultural value chain. Leveraging a unique, digitally-assisted process, your Company has established a strong competitive advantage by providing a completely paperless journey along with API integration with Collateral Managers (CMs), resulting in superior turnaround times for sanction, disbursement, and commodity release. In addition to this, a fully digital rule-based mark-to-market (MTM) process has been established. Quality of the business can be understood from the fact that there are ‘NIL Overdue’ in the overall disbursements till date since inception. This has resulted in sanctions of ~₹ 1,800 Cr and disbursals of ₹ 507 Cr for the fiscal year. Farmer Finance 96,000 new tractors, supported by best-in-class digital architecture and paperless sourcing process. The existing paperless sourcing process is powered by an in-house employee- assisted app which is bolstered Rural Business Finance FY25 was the year when the Rural Group Loans and Microfinance franchise was subjected to a demanding evaluation. It was a year of reset for the industry with MFIN bringing in norms to curtail the overleveraging of customers, followed by force majeure events like prolonged heatwave, severe floods across states coupled with an elongated four months election schedule leading to a temporary slowdown in cashflow towards rural employment generation schemes. This led to disruption of customer income prospects thereby impacting their repayment abilities. Even when this situation looked to be stabilising, the industry was hindered again by a political intervention in the form of Karnataka Micro Loan and Small Loan (Prevention Of Coercive Actions) Ordinance, 2025 brought in by the Karnataka state government to curb the coercive practices by unregistered financiers, which affected growth and collections in the industry. Due to the above-mentioned factors, Corporate Overview Statutory Reports Financial Statements L&T Finance 97
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industry witnessed a degrowth in the overall JLG book outstanding by 13% to 3.8 lakh Cr. The silver-lining in this environment has been normal monsoons, supported by healthy harvests and MSP prices that has facilitated rural consumption stability. Even in this challenging environment, LTF remained resilient and stood out vis-à-vis competition due to its prudent sourcing policies focused on conservative association and exposure norms, time tested credit assessment procedures and risk guardrails. This has resulted in a portfolio that reflected customers upto 3 lenders including LTF comprising almost 92% of the entire loan book of which 45% are exclusive to LTF. This in-turn has resulted in industry best collection efficiency levels of 99.4% and 0-DPD book of 95%. On the operational front, in FY25, LTF empowered over 61 lakh women entrepreneurs (~1.5 Cr customer base) through calibrated growth and a strong rural network of over 2,000 meeting centres (branches) in rural areas and 14,000+ on-field workforce. Accordingly, LTF ended the year with disbursements of 20,472 Cr, with the lending book at ₹ 25,838 Cr, a growth of 5% Y-o-Y. Going into FY26, the Company will continue to closely monitor developments and grow in a calibrated manner by diversifying into underpenetrated and lesser leveraged geographies. Thus, LTF believes that it may be poised to emerge as a differentiated player, thereby, leveraging its strength in tech and data analytics to gain market share as the sector starts picking up momentum towards the second half of the next financial year. Calibrating the Rural Business Finance portfolio towards Secured Loan Propositions Micro LAP Building on its deep rural expertise, LTF has pivoted towards establishing the Micro Loan Against Property product catering to the financing needs of a niche segment of the rural population largely against self-occupied residential property. In FY25, the Micro LAP product has gained traction through a fast- growing granular branch network of 132 branches across the states of Tamil Nadu, Karnataka, Maharashtra, Gujarat, Andhra Pradesh and Telangana with a modest book size of ₹ 482 Cr. This business is being catered to by an exclusive in-house field team supported by a robust on- ground credit unit. Urban Finance Two-Wheeler Finance The Indian Two-Wheeler sector retail sales witnessed an annual growth of 6% compared to the previous year with annual sales reaching 1.86 Cr units. This growth highlights the continuing popularity of two wheelers for commute and underscores the demand for two- wheelers in the market. Two-wheeler sales during the festive season (Oct 2024 to mid Nov 2024) saw a growth of 13.8% Y-o-Y with sales of 33 lakh units driven by strong rural demand. Retail finance penetration, which increased from 62% to 66%, has helped in facilitating this growth. Another catalyst for growth has been the increasing demand for electric two-wheeler vehicles which showed a significant growth of 30% Y-o-Y. Sales of entry-level motorcycles (up to 150 cc) grew 8.6% Y-o-Y and accounted for 80% of overall motorcycle sales. LTF’s growth in FY25 continued to be driven by focus on sourcing prime customers through its dealer sourcing points (~4,500 active dealers). LTF also successfully launched the Valued Partner Programme (VPP), a loyalty programme for dealerships that monitors and rewards dealers for performance while ensuring the desired portfolio quality. This has resulted in the prime disbursement mix increasing from 53% in March 2024 to 82% in March 2025 and the portfolio prime mix increasing from 39% to 54% in FY25. Additionally, the impetus on financing high end bikes, led to an increase in ATS (average ticket size) from ₹ 90,000 to ₹ 1,06,000. Integrated Annual Report 2024-2598
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‘Project Cyclops,’ the new three- dimensional underwriting engine, was piloted at 5% of new sourcing in June 2024 and gradually implemented for 100% sourcing throughout the dealer network by January 2025. Further, in anticipation of strong demand during the festive season, company took proactive and risk mitigating actions such as additional stability document proof, and further stringent policy actions for identified customer cohorts aiding in sourcing better customer profiles. The servicing journey continues to be supported by LTF’s PLANET App which also acts as an excellent engagement tool with customers. On the collections front, your company has taken stringent actions to improve portfolio quality, enhance credit monitoring and has used analytics with the right mix of personnel and collection agencies to contain credit and collection costs. Further, with the improved customer profile, the company has seen a consistent improvement in bounce % along with overall collection efficiency in early buckets. All these measures have resulted in a robust FY25 disbursement of ₹ 9,285 Cr, which is an 8% increase Y-o-Y, and a stable FY25 loan book of ₹ 12,321 Cr, which is a 10% increase Y-o-Y. Home Loans and Loan Against Property The Indian mortgage market, Home Loans (HL) and Loan Against Property (LAP), has been a mixed bag in FY25 growing to a total size of ~₹ 50 lakh Cr. While limited price rises backed up by monetary policy expectations, flexible payment plans and lucrative incentives have maintained the absorption rate, However, the rising land prices and regulatory compliances have affected new project launches leading to a greater shift towards either the affordable segment or the high-end luxury segment. In this scenario your company has done well to reach a combined disbursal of ₹ 9,582 Cr and a combined closing book of ₹ 24,929 Cr (including Home Loans and LAP), reflecting a growth of 27% & 35% respectively (YoY). While the home loan sector in particular saw a roller coaster journey due to the above factors, the burgeoning middle class along with its increasing purchasing power led the growth in the mortgage sector as a whole. Your Company clocked 20% disbursement growth in the Home Loan segment to reach ₹ 6,898 Cr. The LAP segment, with its comparative advantage of attractive interest rates vis-à-vis personal and business loans, has emerged as a popular financial tool for individuals and businesses seeking quick funding. For FY25, disbursals in LAP have aggregated to ₹ 2,685 Cr, thereby achieving a growth of 51% Y-o-Y. Also, with respect to distribution, it is to be noted that LTF has doubled its Home Loans disbursements through the builder channel. Additionally, LTF also entered into a strategic tie-up with PhonePe towards augmenting its digital sourcing channels. FY25 saw launch of new products such as ‘The Complete Home Loan,’ which dealt with funding home interiors and furnishing have led to increased yields and is expected to create a greater positive impact in the next fiscal. With regard to asset quality, LTF continues to maintain industry competent asset quality through its superior sourcing mix and monitoring rigor. LTF also launched new digital initiatives for the purpose of enhancing overall customer satisfaction and reduce TAT. A 'DIY' or 'Do it Yourself' journey was launched at the beginning of the year to enable customers to apply for loans online by themselves without any dependency. Another major initiative was the launch of Knowledgeable AI or “KAI” in November 2024, - a customer chatbot for helping customers with their queries on the go. Personal Loans The personal loan industry in India aggregates to a market size of ~₹ 14.5 lakh Cr For FY25 the Y-o-Y industry growth was 11%, led by disbursements in high ticket size loan segments. The annual growth for FY25 is lower than the previous year Corporate Overview Statutory Reports Financial Statements L&T Finance 99
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Human Resources Over the last few years, your company has enhanced its Processes, improved its Policies and accelerated its Performance which translated into increased Profits and improved Productivity. Recognising that a robust HR strategy is essential to complement any successful business plan, your Company made ‘Capability Building’ the cornerstone of strategy, propelling its vision to become a premier retail NBFC. This framework is built to harmonise human resources initiatives with LTF’s larger business goals. The underlying factor contributing to the significant Progress achieved is the 'People' of your Company who represent the L&T Finance brand to diverse customer groups across rural and urban areas, enabling your Company to fulfil the financial aspirations of Indians as a trusted partner in every customer’s financial journey. on the back of measures taken by RBI for lenders to curtail overleveraging in the unsecured segment. In LTF, Personal Loans was launched in FY21, initially leveraging its two wheeler customer base. This segment of customers continues to contribute ~52% of the disbursements in FY25. During the year, your Company focused on growing the business in a risk calibrated manner for superior customer selection through introduction of Large Partnership and Direct Selling Agents (DSA) channels. These channels support with scale up of Personal Loans from new-to-LTF customers in a risk calibrated manner. SME Finance The Micro, Small, and Medium Enterprises (MSME) sector continues to be a cornerstone of India’s economy, contributing significantly to manufacturing, exports, and employment. As of November 2024, as a part of the details shared in Economic Survey 2024-2025, credit to MSMEs registered a Y-o-Y growth of 13%, surpassing the 6.1% growth observed in credit to large enterprises. Among the factors that contributed to LTF’s growth were comprehensive expansion in 4 states in addition to the existing 118 locations, introduction of new product variant that meets evolving customer needs and expansion of Direct Channel. LTF also implemented a new Loan Origination System (LOS), thereby streamlining processes. The Large Partnership channel is focused on using LTF and partner scorecards to acquire new customers digitally at scale leveraging partner customer base. For FY25 your Company went live with Cred, Amazon & PhonePe. These partners have contributed to 10% of disbursements for FY25. The DSA channel primarily focusses on customer acquisition of prime salaried segment from top 10 cities and scaling it up to more cities in a phased manner. Both these channels will support your Company to scale up the Personal Loans business across new geographies and customers segments. As a result of these concerted efforts, your Company disbursed ₹ 6,096 Cr in FY25 in Personal Loans with the book size reaching ₹ 8,648 Cr. As the regulatory landscape continues to evolve with the increasing use of technology, your Company is well- positioned to navigate the changes and continue its growth trajectory in the coming years. These initiatives contributed to the loan book scaling to ₹ 6,524 Cr in FY25 vs ₹ 3,905 Cr in FY24. LTF disbursed ₹ 5,000 Cr during the year, a 37% increase from the previous year, with the on- book customer base growing to 35,000+. The Union Budget 2025-26 has further bolstered this sector by enhancing the investment and turnover limits for MSME classification by 2.5 and 2 times, respectively, facilitating business expansion and improved efficiency. Integrated Annual Report 2024-25100
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As of March 2025, your Company employed 36,521 employees across three different categories The field force that comprises the sales, collections, and operations staff The supervisory and middle management personnel at the state and zonal levels The middle and top management located at the corporate office The field force employees approximately form 74% of the workforce composition. They are instrumental in delivering financial services to geographically dispersed customer segments in rural and urban areas. Your Company has a rural customer segment across the Rural Business Finance and the Farmer Finance verticals, largely comprising women entrepreneurs and farmers. They are distributed across ~2 lakh villages and contribute to around 44% of your company’s retail business. These rural customer segments are catered to by 25,856 employees. Most of these employees are recruited from deep rural areas, generating sustainable employment and advancement opportunities. This emphasises your Company’s connect with the local community, thereby empowering rural India to forge ahead. The remaining employees cater to our Urban and SME Finance customers. To serve the rural and urban active customer franchise of around ~92 lakh, your Company has a focused approach to engage, develop and demonstrate care for its employees, thus facilitating capability building which is one of our strategic pillars to obtain sustained growth. LTF People Philosophy In FY25, LTF adopted a voice- driven approach to employee engagement through its first- ever anonymous company-wide survey facilitated by Great Place to Work (GPTW), achieving an 86% favourable response rate and earning certification as a ‘Great Place to Work’. The feedback shaped the LTF People Philosophy [‘Experience the C.U.R.V.E. of Happiness’ (Connected, Understood, Respected, Valued, and Enabled)], which emphasises holistic employee well-being and happiness. This framework ensures employees are empowered and supported in their roles. Additionally, the 5-Pillar of Human Resources Strategy guide HR initiatives to attract diverse talent and foster a growth-oriented, supportive environment. LTF's commitment to a Digital Mindset drives innovation and collaboration, helping create a thriving workplace where individuals and the organisation succeed together. Communicating Purpose Your Company’s leaders ensure that the organisation’s vision, mission, and values—Pride, Ambition, Discipline, Integrity—are communicated and assimilated at all levels through a multi- channel strategy involving townhalls, regular emails, broadcasts over mobile communication channel, standees, laptop wallpapers, and campaigns across our digital assets like HRMS portal. Long Range Planning It is an annual exercise where every vertical shares a comprehensive plan with the top leadership to support the strategic priorities of the organisation in an inclusive and cohesive manner. It ensures alignment, encourages collaboration and facilitates sustained growth. Townhall To drive the goals of Lakshya 2026, your Company organises townhalls, where the Managing Director and Chief Executive Officer and Senior Management directly address the managerial workforce. They are broadcasted across the organisation, enhancing transparency, inclusion, and collective ownership. Corporate Overview Statutory Reports Financial Statements L&T Finance 101
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Investing In People Investing in human capital through training and well-being programmes yield long-term financial benefits by enhancing productivity, reducing employee turnover, and fostering innovation. Employee Induction Programme (Parichay) The Parichay programme guides new recruits through LTF’s fundamental values, culture, business operations, and goals. Key training areas include Know Your Customer, Code of Conduct, Prevention of Sexual Harassment, Information Security Awareness, Operational Risk Management and ESG. Career Development and GrowthRole Appreciation Programme Targeted at Frontline employees, the RAP programme is a unique four-day experience combining immersive field visits and interactive classroom sessions. A standout aspect of RAP is its emphasis on informed consent. Candidates participate in experiential learning prior to making a commitment to your Company, ensuring mutual alignment of expectations. Udaan Your Company’s flagship 'Campus to Corporate' includes an orientation conducted by HR and senior management, followed by customised technical training tailored to their specific roles. In FY25 we have recruited 100+ Graduate Engineer Trainees and Management Trainees who will play an instrumental role in our journey to become a fintech@ scale. Aspire The Aspire initiative is a tailored succession programme designed for front-line sales employees, emphasising capacity building to prepare them for advanced roles. Leadership Development Programme The Leadership Development Programme addresses key imperatives such as mitigating people risks, creating a succession plan for critical roles, and providing aligned career paths for leaders. Competency Framework A customised framework has been built through ‘Visionary Discussions’ with the leadership team along with focused group discussions with employees. This is to drive performance and support an integrated Talent Management Strategy at your Company. e-Gurukul LTF's digital learning portal offers diverse, gamified and bite-sized learning tools, accessible through popular channels like WhatsApp and internal Learning & Development hub. LTF Employee Connect Essential information and company- wide updates are broadcasted to all employees through a mobile communication channel, targeted to relevant employee groups, supporting our quest to become a boundaryless organisation. STRIDE Launched in October 2024 based on GPTW survey insights, STRIDE Integrated Annual Report 2024-25102
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supports self-driven learning through courses, certifications, and degrees aligned with career goals. It includes financial assistance and a collaboration with Symbiosis School for Online and Digital Learning (SSODL) Winspire With an aim towards fostering and focusing on women leadership, your Company has taken a significant and maiden step by nominating women employees for three tracks of the Winspire programme. These tracks focus on empowering and advancing women at various stages of their professional journey. Rewarding Excellence At LTF, recognising and celebrating employee achievements is a core value that energises the workforce. In FY25, your Company continued its commitment to excellence with recognition initiatives designed to honour those who make extraordinary contributions. Long Service Award This award honours employees who have dedicated a significant portion of their careers to the organisation. During the year, 173 Awardees with a tenure milestone of 10+, 15+ and 20+ years with LTF were felicitated, celebrating their loyalty and commitment to your Company over the years. STAR Awards The Star Awards is the flagship recognition programme at LTF, celebrating employees who go above and beyond their duties to achieve success in areas where others may not have dared to venture. This award recognises individuals who demonstrate exceptional performance and commitment, contributing to the overall success of the organisation in a truly remarkable way. Wall of Fame The Wall of Fame honours employees who demonstrate extreme ownership, commitment, and dedication to delivering outstanding results. This recognition initiative acknowledges individuals whose performance aligns with your Company’s quarterly and monthly business priorities. Champions League Champions League was designed with the underlying idea of identifying top performers across businesses and functions who possess the intent of delivering superlative performance for the organisation while working within the predefined credit and risk guidelines from February to March 2024. 2,004 employees were identified as winners across categories, with 104 employees taken on a cruise to Sri Lanka. Giving Employees A Voice IdeaXpress Launched in FY25, the IdeaXpress is an initiative that is designed to drive transformative ideas by encouraging employees to propose solutions that improve business operations. This initiative aligns with LTF's ‘Listening Framework,’ ensuring that employee feedback is heard and acted upon. We Hear You In alignment with our commitment to building a transparent and inclusive organisation, your Company launched ‘We Hear You,’ an Corporate Overview Statutory Reports Financial Statements L&T Finance 103
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employee forum that encourages open dialogue across all levels. The platform offers employees a confidential space to share their opinions, provide valuable insights, or highlight any concerns, even anonymously if they choose. Engaging Employees L&T Finance follows a structured annual plan for employee engagement, meticulously crafted at the start of each financial year. This plan is developed in alignment with organisational goals and executed collaboratively by the HR team, which includes zonal and regional representatives. Thank God It’s Friday (TGIF) – Monthly Celebration Initiative A monthly celebration initiative launched to enhance engagement and foster a positive work environment, based on insights from the Great Place to Work survey. Held on the last Friday of every month, TGIF features cultural events, festive gatherings, food-sharing, and creative activities. From celebrating milestones like the Company’s 30-year journey to theme-based events, the initiative promotes team bonding and reinforces LTF’s people-first culture. Sports and Wellness As part of the L&T Sea Bridge Marathon at Atal Setu in Mumbai, a contingent of employees, led by senior executives, participated in the run—promoting fitness, teamwork, and a spirit of collective achievement. Competitions LTF fostered employee creativity and engagement through initiatives like ‘LTF Got Talent’, where employees showcased their creative skills and talents, ranging from music to comedy; the Photography Contest themed ‘India Through My Lens,’ ‘QuizWiz,' and ‘ArtBeat’. Cultural and Festive Celebrations Your Company celebrated key events like International Women’s Day 2025 with the theme #AccelerateAction, honouring women’s achievements; Independence Day - Let’s Make News, a creative contest using newspapers; and key festive celebrations to highlight creativity and cultural pride. Community and Social Impact LTF employees participated in Swachhata Hi Seva, contributing to the national Swachh Bharat Abhiyan through a cleanliness drive, and engaged in Daan Utsav - Hafta Challenge during the Joy of Giving Week, promoting acts of kindness like writing thank-you notes, helping those in need, and connecting with nature. Localised Engagement for Rural Workforce With over 25,000 employees across branches and meeting centres, LTF’s decentralised initiatives ensure inclusivity and engagement for rural employees, including ‘One Team One Lakshya', where employees left handprints on a canvas symbolising unity; the ‘BM Connect’ Programme to strengthen engagement and communication at the branch level; Cultural Celebrations like Lohri, Bihu, Pongal, and local events; and wellness awareness through doctor- led video sessions on seasonal health precautions in regional languages. Caring For Employees Health and Well-Being To safeguard employee health and wellbeing, LTF offers several ` Integrated Annual Report 2024-25104
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Women Friendly Policies Your Company has introduced progressive women-friendly policies, including extended leave of up to one year for young mothers with work-from-home options, alongside childcare leave and maternity benefits. Your Company also offers creche reimbursements for up to two children under six, local conveyance reimbursements, ergonomically designed chairs, and priority parking spaces for expecting mothers. Mess Facility Launched for branches of Rural Business Finance, this initiative provides employees with access to healthy and hygienic home-cooked meals. Extended to over 1,100 branches across eleven states, the facility encourages better nutrition, convenience, and social interaction among employees during meals, helping reduce reliance on fast food, thereby promoting well-being. Distribution of Helmets for Road Safety As part of LTF's commitment to road safety, your Company has introduced the provision of helmets for all frontline officers, a proactive step towards ensuring their well-being and fostering a culture of safety from the very start. Installation of Air Coolers Demonstrating its commitment to employee well-being, your Company installed Air coolers across 1,007 Meeting Centres, ensuring a more comfortable and conducive working environment. Elevating Employee Experience through Workplace Infrastructure In FY25, LTF’s Facilities and Channel Management team executed multiple infrastructure projects across 1.5 lakh square feet, adding 2,600 seats, including the launch of 25 new branches for the MLAP business. Notable projects include the Application Engineering Centre, designed to foster collaboration; the New Mahape Office in Navi Mumbai for over 1,300 employees; a fully equipped Auditorium at Mumbai Kalina Office; and standardisation Driving a Culture Of HR Excellence In FY25, your Company participated in the HR Excellence Model (HREM) assessment, a robust framework utilised by your Group Company, aligned with the CII HR Excellence Model. This involved a comprehensive evaluation of key people processes, focusing on both execution and measurable outcomes. The exercise enabled a structured identification of gaps, adoption of best practices, and a clear roadmap for sustained process improvement. Your Company’s efforts were recognised with the “Emerging Leader” distinction, reaffirming commitment to building a culture of excellence in HR. initiatives, including an Employee Assistance Programme (EAP) with 24/7 AI-enabled psychological first-aid and consultations across 53 specialties; physical consultations at office dispensaries twice a week; SOS services for emergency ambulance access via an app; and health and well-being workshops focusing on physical, mental, and emotional wellness to help employees manage the challenges of modern life. of branch infrastructure to ensure a consistent, high-quality experience for both employees and customers. Corporate Overview Statutory Reports Financial Statements L&T Finance 105
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This committee monitors the implementation of the Board- approved risk management framework, which outlines risk tolerance, limits, monitoring tools, and early warning systems. Collaborative efforts between business units and the risk management department ensure alignment between business strategies and established policies, facilitating informed decision-making and continuous oversight. To evaluate financial stability during significant events, LTF conducts rigorous stress testing. LTF’s Risk Appetite Statement is a written articulation of the aggregate level and types of risk that it accepts, or avoids, to achieve its business objectives. It includes qualitative and quantitative risk measures expressed relative to solvency (credit rating, tier 1 capital ratio), liquidity (survival horizon, structural liquidity), earnings (return on assets) and franchise protection (operational risk scorecard, emerging risks like cyber risk, sustainability and climate risk, reputation risk). Risk limits like regional exposure limits, limit for unsecured book, sectors limit and management limits are set to cascade the Risk Appetite Statement to business line, specific risk categories and concentrations. Further the LTF uses Earnings at Risk (“EAR”) approach as a key forward- looking metric to convey risk levels as financial outcomes and provide an anchor for setting hotspot limits. Using EAR as the anchor metric, concentration limits are set across all retail Business Units (BUs) so as to allow earnings loss within the acceptable ‘buffer’. Thresholds of the Risk Appetite Statement as well as risk limits are monitored on a quarterly basis and presented to the Risk Management Committee. All of the above ensures that the business planning process of the LTF meets the ‘Risk Level’ objectives. Early identification of emerging risk and updation of the same to Senior Management and RMC is done on a periodical basis. In the event of any material events which has been observed either internally or externally, it is discussed and suitable learnings and actions are incorporated into processes. Stress testing of key risks is undertaken to understand the resilience of the LTF along with suitable actions (if required). For effectively managing the credit risk on Retail assets of LTF like Micro Loans, SME Loans, Two-Wheeler Loans, Farm Equipment Finance, Warehouse Receipt Finance, Housing Loans, and Personal Loans, among others., Retail Risk management framework covers portfolio monitoring through real time risk dashboards in combination of risk analytics validating and monitoring credit models. Early Warning Signals (EWS) at LTF works at two levels - Macro and Micro. In house economic team track Risk Management Effective risk management involves a systematic approach to identifying, evaluating, and mitigating potential and existing risks. This process encompasses both qualitative and quantitative analysis, focusing on the establishment and refinement of controls to minimise or prevent adverse outcomes. LTF has a Board-approved Risk Management Framework, Strategy and Plan in the form of Board-approved Enterprise Risk Management Policy which is reviewed annually or on need basis whichever is earlier. The framework is designed to provide a way to proactively identify and mitigate risks that could impact LTF’s ability to achieve strategic objectives. Your Company's risk management framework focuses attention on key areas of risk such as credit, model, operational risks and Infosec. Wherever feasible, such risks are mitigated through processes/ procedures which are developed and suitable steps are taken for effective mitigation and continuous management. Other risks which the LTF faces like reputation, regulatory/ compliance risk, outsourcing risk etc. are managed by respective independent functional departments of risk with periodic reporting to Management and Board wherever considered necessary. Maintaining robust risk management practices is crucial for achieving strategic objectives while ensuring resilience across economic cycles. The Board of Directors oversees these activities through the Risk Management Committee (RMC), which convenes quarterly. Integrated Annual Report 2024-25106
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multiple macro variables and have analysed its trend with portfolio quality. Team issues regular bulletin to each business with respect to relevant macro trend, which helps to steer portfolio in right direction. Further, Risk team has identified micro parameters and monitor portfolio performance based on these parameters. Portfolio reviews are carried out to take portfolio level actions and minimise losses. These monitoring mechanisms help take remedial measures and limit losses. At LTF, Risk team keeps a close watch on latest developments in external world in form of field meetings with customers, dealers, DSA’s, regional team, front line staff, vendors and Risk Departments and Business/ Credit departments of competing banks and NBFC’s. In addition, there are frequent senior management meetings where all emerging and existing risks are discussed and (ALCO) are conducted on periodical intervals for assessing and review various aspects of risk arising from the business operations of the LTF as shown in the following: The Company’s commitment to fostering a forward-thinking risk culture has contributed to its position as a top-tier Non- Banking Financial Company (NBFC) with a AAA credit rating. Recognising the evolving business environment and emerging management system. To address this, your Company is upgrading its underwriting architecture with a modern engine that utilises bureau, account aggregator, and alternate data, enhancing their existing analytical framework. Credit Risk is generally made up of transaction risk or default risk and portfolio risk. The portfolio risk in turn comprises of intrinsic and concentration risk. Credit risk of portfolio depends on both external and internal factors. Credit risk management is essential to minimise default risk and concentration risk. LTF follows a pragmatic framework for evaluating financing opportunities aligned to the risk-return strategy of the organisation, within the applicable regulatory environment. A structured approach to credit risk management is established in line with the goals/strategy of the organisation, internal and external environment. The company ensures adherence to RBI’s policies and guidelines to optimise benefits for the clientele and other stakeholders. Your Company has better management of credit risk profile of the portfolio with emphasis on risks, such as reputational and climate-related concerns, LTF has developed new frameworks to proactively manage these challenges. Furthermore, the company has implemented the Internal Capital Adequacy Assessment Process (ICAAP), which encompasses the evaluation and management of various risks, including credit, market, liquidity, interest rate, operational, strategic, regulatory, climate, and model risks, and determines the necessary capital for current and future periods. LTF’s business faces considerable credit risk, necessitating a robust along with appropriate strategies to mitigate the same. Various internal meetings like Risk Management Committee (RMC), Operational Risk Management Committee (ORMC), Outsourcing Management Committee (OMC), Model Risk Management Committee (MRMC) and Asset Liability Committee Corporate Overview Statutory Reports Financial Statements L&T Finance 107
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quality, close monitoring, timely collection and well delineated exit options, both at portfolio and borrower level. LTF is bolstering its existing data and analytics-based underwriting architecture with a new-age underwriting engine comprising bureau, account aggregator and alternate data signals. Project Cyclops, the AI-driven digital credit engine is working towards strengthening credit risk assessment by delivering real-time, data-driven insights. Leveraging advanced machine learning algorithms and big data analytics, Project Cyclops streamlines the entire credit lifecycle—from origination and underwriting to continuous risk monitoring. This innovative platform integrates seamlessly with existing systems and utilises alternative data sources alongside historical performance metrics to optimise credit evaluations, enabling precise risk categorisation and targeted lending decisions while significantly reducing default risks. The other ancillary advantages that will accrue includes swift credit decisioning as well as ensuring faster onboarding of prime credit worthy customers, thereby sifting between sensitive and resilient borrowers and the swap-in swap-out rates. For the retail finance assets portfolio, monitoring is undertaken at a portfolio level at regular intervals through Retail Portfolio Review meetings attended by Senior Management of various Products as well as Risk Management department. Portfolio Review is a very important tool in managing credit risk as it enables Senior Management of LTF to understand the institution’s aggregate credit risk, make decisions regarding improving the returns on those risks, making changes to the extant credit policy and identifying and managing concentrations of credit risk. Your Company further uses advanced dashboards which provide real-time identification of trends and breaches, empowering it to proactively manage risks and take immediate action to mitigate any potential threats. Your Company is in process of developing an advanced Early Warning Signals engine to proactively identify stress signals and take corrective measures to mitigate risks. By analysing behavioural patterns, alternative data sources, geopolitical data, and macroeconomic factors, LTF can make informed decisions and predict future defaults. Operational Risk Management Operational risk is ‘the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events. Thus, operational risk is an ‘event risk’. Operational Risk includes all the risk events that may potentially cause a loss to the company. These events are foreseeable and avoidable to a large extent. This risk appears at different levels: people, processes, technical and information technology. Given the dynamic nature of financial market, new products need to be introduced from time to time and existing product features modified. A detailed product note for the new product which captures all the salient features or change in the existing product(s), including product specific credit policies is made in consultation with all the relevant functions/stakeholders and is approved by the Product and Process Approval Group (PAG). Any new product policies as approved under above delegation is submitted in the ensuing RMC for noting. Annually all updated product notes are noted in the RMC. Further, Operational risk department in LTF periodically reviews and updates the Standard Operating Procedures (SOP) for various products/activities and documents the same. Modifications to SOP’s are also discussed by cross functional teams (including representative of risk management department) to ensure comprehensiveness of the process and suitable controls being in place. This mitigates people risk which refers to unintentional human errors, lack of expertise, fraud, failure to comply with the procedures and policies, work and safety norms in the office premises, vendor and outsourcing risks. This also mitigates process risk which includes inadequate procedures and controls for reporting, monitoring and decision making; organisational deficiencies; management deficiencies in monitoring risks, errors in recording process of transaction. Under Operational risk, LTF manages Outsourcing risk to mitigate non-performance, or poor performance by a service provider under a material outsourcing arrangement resulting in financial loss, regulatory breaches, and reputation loss. LTF OR framework follows an approach of Risk and Control Matrix (RCM) which is a key risk identification and assessment tool. Such RCMs are thematic which covers customer onboarding journeys, business operations, and collections, among others. Scope of RCM is as follows: Integrated Annual Report 2024-25108
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Enable business and support units to attain a transparent and complete end-to- end view of the key risks that could impair the achievement of business objectives and/or impact core business processes; Assist management in attaining a holistic view on how internal controls mitigate risks and their actual effectiveness; Formulate and implement action plans to address any gaps/ lapses in the internal control environment; Promoting awareness of operational risk and control throughout organisation. Results of RCM are presented in the ORMC. To conduct effective risk assessment, the impact and likelihood of risk are calculated based on which inherent risk is determined. Inherent risk is defined as the risk prior to the application of controls. Root Cause Analysis (RCA) helps to analyse event for ascertaining cause-effect relationship and initiating necessary corrective steps including improvement to processes, controls and training. Corrective and Preventive Action Plan (CAPA) is drafted in detail along with the respective Turn Around Time (TAT) for closure. CAPA is monitored until closure and the update of the same is also published on monthly basis to all the Heads, GECs and CXOs (Senior Management). Annual calendar is published for testing of the RCA and the results of the same are also published in the ORMC. Model Risk - Model risk refers to the potential for errors or inaccuracies in the models used for decision-making that can lead to incorrect assessments of risk or value and increase the risk of losses for the Company. Models are used in various areas including credit risk management, collection decisions, market risk management, and financial reporting. Model Risk Management in LTF is carried out by the Model Risk Management team whose responsibilities includes managing a Model Governance Framework containing sets of policies, procedures, and controls that are designed to manage the risks associated with the use of models in decision-making processes. The decision-making includes evaluation of consumers at various stages of the customer journey (onboarding, cross-selling, and collection, among others), of various financial parameters (asset valuation, and income estimation, among others), and of portfolio parameters for the purpose of regulatory reporting PD, and LGD, among others). To govern the Model risk, Board-approved Model Risk Management policy and Model Risk Management Committee has been put in place in FY24. The objective is to review various model aspects at different stages of the model (development, active use, change and retirement), and to set a high standard for the model by putting in place a robust risk dependent review and monitoring framework. In case any potential weakness is realised or observed, then set of appropriate compensating controls are put in place to mitigate exposed risk around it. Furthermore, Company-appropriate model development guide will be defined based on observations made during the model reviews over the course of a quarter, ensuring a minimum standard is set up and thereby enriching the entire model development process leading to a more robust and reliable model. Climate and ESG Related Risk Your Company acknowledges the material risks associated with climate change, which may manifest as operational interruptions, elevated costs, and alterations in asset values. To mitigate these potential impacts, the Company integrates climate risk considerations within its decision- making protocols, undertakes periodic portfolio assessments, and allocates resources towards environmental impact mitigation. Detailed analyses, encompassing variables such as rainfall deviation, reservoir storage capacity, and agricultural practices, Corporate Overview Statutory Reports Financial Statements L&T Finance 109
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are performed to ensure effective risk management. Moreover, the Economic Affairs Group of the Company provides valuable input regarding environmental and social determinants influencing assets under management during the regular Asset Liability Management Committee (ALCO) meetings. Portfolio reviews are conducted periodically with a specific focus on evaluating exposures arising from climatic and meteorological events, including floods, cyclones, and droughts. ESG risks, with particular attention to climate-related concerns, are diligently monitored and embedded within LTF’s risk management framework. In recognition of emerging risks, including those pertaining to reputation, sustainability, and climate, the Company has formulated a structured approach to address these challenges. Furthermore, in compliance with the directives of the RBI, an ICAAP incorporating ESG risks has been established Infosec Risk: The Infosec team at LTF is responsible for securing business applications from cyber threats by incorporating security in design of applications, monthly security assessments on GCP , cloud and data centre, having best in class virus and threat protection practices, carry out ethical hacking through external experts, round-the-clock security event monitoring of all IT assets. The Information Technology Strategy Committee (ITSC), comprising board members, has been established to oversee the company’s security posture. This committee conducts quarterly reviews of the status of all security initiatives, identified risks within the IT infrastructure/ applications, summary of vulnerability management, and threats prevented. Furthermore, the ITSC is responsible for reviewing and approving policies mandated by regulatory to ensure compliance. In addition, there is a Monthly Security Dashboard meeting which discusses the IT security posture of IT infrastructure security, application security, security governance, data security, and business resiliency and is measured and reported monthly to the respective IT and Application heads, including the CRO and CDO. The comprehensive summary is presented and discussed which includes application security testing, patch and vulnerability management, cloud posture and workload risks, data security risks, phishing drill activities, antivirus compliance, SOC summaries, DR tests, user access reviews, and other identified risks. The Infosec follows Board-approved Policies such as: Master Cybersecurity Data Privacy Policy Cyber Crisis Management Plan Change Management Policy Information Technology Business Continuity Policy IT Outsourcing Policy LTF has set up an Information Security Management System (ISMS) for effective management and operation, which is ISO 27001:2022 compliant and certified. To prevent emerging threats, your Company has implemented controls to ensure business continuity and data protection. LTF’s digital platform has a 3-tier security architecture with in-built disaster recovery, along with multiple-layer security. This security system protects its IT Network, Websites and Application, Databases and end-user laptops/desktop for data leakage, denial-of-service attacks, ransom ware and malwares. Furthermore, the system implements effective access control and monitors system health and availability 24X7. Integrated Annual Report 2024-25110
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Regulatory Risk Assessing the effectiveness of compliance is a key aspect of the Compliance framework, with your Company deploying techniques to evaluate the level of compliance and identifying instances of non-compliance. The Compliance Risk framework adopted by your Company provides robust parameters to assess and monitor your Company’s key compliance risks and regulatory activities. The framework interalia identifies risks arising from regulatory environment and assesses the effectiveness of controls in place to mitigate the compliance risks. The guiding principles are enshrined in the Compliance policy of LTF. Your Company has undertaken assessment and testing under a Compliance Testing Geopolitical Risk Your Company proactively identifies, assesses, and mitigates risks stemming from an array of challenges like global/ domestic geo- political events and tensions, economic uncertainties, high inflation and financial volatility that can impact business strategies and financial stability of your Company. LTF monitors these emerging risks, and calibrates its strategies across different regions/ customer segments to adjust exposure in line with assessed risk perception. Note: For details on internal control systems and their adequacy, please refer the Board’s Report. Programme, which enables it to identify compliance failures/gaps, and flag any impending problems before they become significant and potentially damaging. Your Company prepares an annual compliance test plan which identifies key test areas considering variables like major new circulars, deficiencies identified in the regulatory inspection reports, fair practices code and know your customer/anti-money laundering compliance, among others. Compliance testing is carried out on a quarterly basis through selecting and reviewing samples, walk-throughs with relevant stakeholders, among others. Identified issues are discussed with the Management and reported to the Audit Committee with the target timelines for addressing/closing the issue. This activity enables your Company to get better control over activities and helps in building compliance culture within the organisation. Environmental, Social and Governance (ESG) Leading Sustainable Growth and Business Impact Driven by its core values, ethics and belief in creating a positive impact and value creation for all its shareholders, LTF has been a pioneer in embedding ESG in its business strategies, operations and business impact. Guided by purpose to foster positive economic, social, and environmental impact, your Company has embedded ESG as a core enabler of responsible growth. In FY25, your Company has advanced from proactive to transformative leadership in the industry, backed by robust capability building across people, processes, and platforms. LTF is committed to becoming carbon neutral by FY35, maintaining water positive/surplus status, enhancing workforce diversity, upholding the highest standards and transparency in disclosures for sustainable business growth. FY25 has been a significant year as your Company has built the ESG roadmap and achieved key milestones that has positioned your Company to further ESG Impact. Amongst 1st Indian NBFC to conduct Double Materiality Assessment NBFC - Signatory to Partnership for Carbon Accounting Financials (PCAF) Business Impact Study (BIS) conducted for all Products Corporate Overview Statutory Reports Financial Statements L&T Finance 111
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The Board and the CSR & ESG Committee are responsible for providing oversight for ESG policy implementation and initiatives. In FY25, LTF strengthened its ESG governance system with the aim to further enhance ESG integration into operations by establishing the Sustainability Steering Council (SSC). The SSC reviews and recommends ESG policies and actions to the CSR & ESG Committee. The comprehensive ESG policy framework that underpins your Company’s operations continues to Strengthening the resilient ESG Governance guide sustainability commitment. All ESG policies are approved by the Board, CSR & ESG Committee of the Board as recommended by the SSC. In FY25, all the ESG policies were reviewed with a special lens of Diversity, Equity, and Inclusion (DE&I) lens and changes were made accordingly. LTF also adopted its maiden Sustainable Procurement Policy in FY25, aimed at ensuring regulatory compliance and reinforcing Company’s standing as a responsible, future-oriented organisation. LTF has also upgraded its DE&I Policy, to ensure it supports evolving workplace expectations, and promotes a more inclusive and equitable environment for all employees and a key advancement of revising the POSH policy to a gender-neutral policy was done. Your Company also has an environment, health & safety, human rights policy. Policies like Data Privacy, Fair Practise Code, Internal Corporate Governance, KYC, Information Technology and other existing policies have been approved by the Board. Additionally, your Company also has a third-party code of conduct which encourages ESG consciousness among its value chain partners. Moreover, your Company also has a Sustainable Finance Framework (SFF) with the intent to drive positive environmental and social change by channelling investments into impactful projects aligned with the UN SDGs. All Board members were trained on ESG, Infosec & Double Materiality. Formation of Sustainability Steering Council Gender Neutral POSH Policy Adoption of Sustainable Procurement Policy Strategy towards Transformative ESG Leadership LTF has integrated ESG accountability at the highest levels, ensuring leadership alignment through ESG- linked KPIs. Your Company has been setting public, long-term, middle- term and short-term ESG targets and has been achieving them. As an early adopter of decarbonisation strategies and financed emissions baselining, LTF is contributing to India's 2070 Net- Zero goal with a strategic focus on green, inclusive, and social finance. LTF is not just driving business growth but also fostering economic empowerment and environmental responsibility. Through this multi-faceted ESG strategy, LTF is reinforcing its position as a responsible financial institution, ensuring that sustainability remains central to its business transformation. In FY25, LTF has developed a structured five-year roadmap to drive its ESG goals with clear milestones and targets. This roadmap ensures a comprehensive approach to sustainability, covering sustainable finance, climate action, social impact Integrated Annual Report 2024-25112
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50 Top Branches Covered Under Energy Audit & Assessment ~33% Company Operations on Green Power ~5% Energy Saving Potential Opportunities Identified +ve Successfully Retained water Positive/Surplus Status STP Revamp Increased Wastewater Recycling by >90% & >60% Decrease in Fresh Water Usage NBFC - Signatory to Partnership for Carbon Accounting Financials (PCAF) Biodiversity Study conducted - 39 Flora and 69 fauna species supported through Miyawaki plantation Waste quantification study leading to waste management roadmap and governance. The roadmap began with peer analysis using maturity assessments, enabling LTF to benchmark its ESG performance against industry best practices. It was further strengthened by a Double Materiality Assessment, ensuring a comprehensive understanding of the financial and societal impact of sustainability risks and opportunities. This roadmap was translated into well-defined ESG targets and Key Performance Indicators (KPIs) with structured timelines and measurable objectives. LTF remains committed to continuous ESG improvement and industry leadership. Advancing Environmental Stewardship Your Company’s environmental strategy for its goal on Carbon neutrality by FY35 is guided by a science-based approach and a deep sense of climate accountability. In FY25 too, LTF continues to remain on track to meet this target. A measurable progress in reducing operational emissions, with an ~16% year-on-year decline in Scope 1 and 2 emissions has been achieved. LTF also expanded its renewable energy adoption, sourcing green energy for a growing number of operational sites while optimising energy consumption through advanced technologies and real-time monitoring. Currently, ~33% of our total energy consumption is sourced from renewables. Your Company has also introduced energy-efficient infrastructure across key facilities. The afforestation initiatives have resulted in the planting of over 1 lakh trees and achieved a carbon sequestration of ~973 tCO2e leading to creating carbon sinks through sapling plantations and increase in green cover. As a proud signatory to the PCAF framework, your Company is amongst the 1st NBFCs enhancing transparency in financed emissions. Your Company has also conducted energy audit for 50 locations to reduce operational carbon footprint and ensure impact is both far- reaching and future-ready. Your Company has successfully retained Water Positive/Surplus Status for over last 3 years with assurance by third-party. A major milestone was the revamping of the Sewage Treatment Plant (STP) at its head offices, enhancing recycling capacity and reducing freshwater dependency. Water User Groups from the communities were trained to maximise water replenishment through water shed management leading to ~176 lakh KL of water. Additionally, a comprehensive waste management assessment across top 50 branches was conducted to estimate per capita waste generation, enabling data-driven waste management strategies. In FY25, a special biodiversity study conducted revealed that 39 flora and 69 fauna species were being supported through your Company’s Miyawaki plantation. Corporate Overview Statutory Reports Financial Statements L&T Finance 113
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Launched DE&I Training - Gamified Module in Vernacular Languages 5.4% Increase in women representation ~4.5 Times Increase in Women FLOS in Rural Business Finance Another significant area of focus was Occupational Health & Safety (OHS). In FY25 your Company has undertaken and conducted Hazard Identification and Risk Assessments (HIRA) across 25 branches across PAN India proactively addressing potential risks. The Head Office has achieved ISO 45001 certification, demonstrating adherence to the highest global standards in occupational health and safety. Various other preventive measures were undertaken to ensure health and safety of employees. A road safety element was also incorporated into the daily pledge of the frontline employees, to upheld the best practices of health & safety. Helmets were also distributed to frontline officers as safety gears at multiple locations in PAN India. Workshop and training was arranged on Certified Internal Auditor for ISO 45001:2018 Std. (Occupational Health and Safety) and a green skill training for Financed Emission for internal stakeholder by third- party experts to enhance the understanding on OHS and climate- related financial risks. Value Chain Partners LTF has been engaging with its value chain partners over the last couple of years with an intent to encourage ESG consciousness amongst them. Incrementally, in FY25, LTF hosted its first-in-person ESG value chain partner meet which brought together key stakeholders, including leading banks as well as investors, to discuss ESG best practices, innovative strategies, and success stories. This initiative, building on LTF’s virtual engagements since FY23, has reinforced collaboration and commitment to sustainable business practices, strengthening ESG awareness and integration across its value chain. Customers LTF undertook its maiden Net Promoter Score (NPS) initiative in FY24, to gauge customer loyalty and satisfaction across all its products during the customer onboarding journey. Progressively, in FY25, your Company has successfully deployed and measured Net Promoter Score (NPS) for customer interactions at various touch points. Creating Impact Through Stakeholders Collaboration Your Company recognises talents, experiences, and viewpoints that each employee and stakeholder brings, cultivating a culture rooted in equality. Employees LTF has embedded diversity and inclusion at workplace in every aspect of its operations and in FY25 is focused on increasing women representation in total workforce. LTF formed a working council to lead DE&I initiatives. As a result, your Company has been able to increase women representation in total workforce from 4.6% to 5.4%, while women representation of 18% and 9% maintained in senior and mid management. There was a 4.5x increase in women FLOs. Your Company has been conducting DE&I sensitisation and awareness session for employees to promote a more inclusive and equitable workplace by increasing understanding and awareness of diversity, equity, and inclusion concepts. Continuing DE&I training, a Gamified module in 7 vernacular languages was launched for BL, FL – l, ll & FML & OL lll. For the first time in FY25, your Company nominated women employees across all levels for the Winspire programme with the aim of empowering and advancing women at various stages in their professional journey. 5 such batches of women participated in this leadership programme. Integrated Annual Report 2024-25114
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LTF regularly educates its customer on various topics through blogs, social media campaigns, other communication channels. By focusing on continued transparency and engagement your Company has not only grown its customer base but cultivated customer loyalty. Communities During FY25, your Company through its CSR activities continued to transform rural communities impacting over 16.90 lakh people. Creating Impact ESG in Operations During the reporting year, your Company continued to integrate ESG in its operations by reducing dependency on paper by going digital, shifting to renewable energy to reduce carbon footprint, integrating ESG due diligence in selection process of new branches, enhancing waste segregation practices and tying up with external authorised waste segregation and recycler. 100% employees were trained on ESG mandatory module. ESG Impact through Business Your Company is able to achieve responsible growth aligned with the ESG vision by leveraging technology to deliver inclusive lending solutions that empower underserved communities, including women, farmers, and small business by combining scale with social impact. Your Company's product portfolio qualify as ESG-aligned— encompassing inclusive lending (micro-loans for women, farmer loans and Farm Equipment Finance, Rural Business Finance, SME Loans, Urban & Two-Wheeler Finance for underserved segments) and social impact offerings. By supporting rural entrepreneurship, agriculture and urban needs your Company drives equitable growth and fosters social impact aligning with organisations ESG commitment. Your Company continues to reimagine technology as a powerful tool for empowerment. The digital platform is driving equity by enabling access to financial services for underserved and remote communities along with the rural population. Over 1.72 Cr customers, many of them first-time users were onboarded through inclusive digital outreach PLANET App in FY25, which also supports multilingual capability and accessibility features. LTF has also scaled digital inclusion, with more women and marginalised youth gaining access to finance and digital skills through in-house developed platforms and outreach programmes. In a world where fintech is reshaping financial access, your Company believes innovation must be built on a foundation of ethics and trust. In FY25, your Company has recorded 0 cybersecurity breaches, maintained data privacy and expanded secure digital access to users. Your Company’s responsible finance approach empowers users while safeguarding the integrity of the digital platforms. On the inclusion front, your Company has scaled use of digital platforms to reach rural populations, offering accessible financial services through digital- first interfaces, multilingual support, and assisted channels. These tech-led interventions have allowed LTF to serve over 1.7 Cr customers in rural regions, driving economic empowerment where it is needed most. Your Company’s core operations now leverage AI-driven analytics, and intelligent automation to streamline processes through paperless workflows, digital onboarding, and virtual servicing, your Company has significantly cut resource consumption and improved turnaround times, enhancing both customer experience and operational sustainability. Corporate Overview Statutory Reports Financial Statements L&T Finance 115
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Sustainable Finance LTF’s sustainable finance strategy emphasises providing financial support to key sectors like agriculture, agriallied services, and SMEs, particularly targeting underserved and marginalised communities. Your Company provides services to aspirational districts and laggard states to drive positive social impact. Your Company, through its sustainability focused loans and priority sector lending, has been creating a positive business impact. Your Company continues to lead with conviction, driving sustainable fintech solutions that balance growth with long-term impact. As part of this journey, your Company has: Financed over 64,000 EVs encouraging sustainable product financing Leveraged over ~2.6 Cr database of customers, with ~1.7 Cr from rural regions Corporate Social Responsibility Driving Sustainable Impact through Strategic CSR Initiatives In FY25, our Corporate Social Responsibility (CSR) initiatives demonstrated a robust commitment to addressing critical societal and environmental challenges, aligning with our vision of fostering financial and digital transformation, while creating sustainable livelihoods. Our strategic approach based on 3S principles, centred on projects Social impact, Scalability and Sustainability, allowed us to achieve significant milestones across our key thrust areas of Digital & Financial Inclusion (DFI), Disaster management, Climate Impact Management and Social Inclusion. A cornerstone of our efforts was the Digital Financial Inclusion programme, anchored by the flagship Digital Sakhi 2.0 CSR initiative. We surpassed our targets, educating over 1.05 lakh community members through vernacular digital modules and empowering more than 7,500 women entrepreneurs in the Karnataka, Kerala, Tamil Nadu, West Bengal, Bihar and Uttar Pradesh. The expansion of the Digital Sakhi project to new districts in state of Bihar (Saharsa), Uttar Pradesh (Kushinagar), and Rajasthan (Udaipur, Chittorgarh and Rajsamand) resulted in onboarding and training of 300 new Digital Sakhis, spreading digital and financial awareness amongst more than 3 lakh community members. Additionally, 3,000 new women entrepreneurs were identified and trained on entrepreneurship skills. One of the significant achievements was linking over 2 lakh community members with state specific financial and social schemes, unlocking nearly ₹ 180 Cr in entitlements. Special campaigns focussing on prevention and control of cyber and digital frauds were conducted in more than 1000 villages reaching out to 1.40 lakh community members. Integrated Annual Report 2024-25116
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Another impactful contribution under Disaster Management was our immediate response to the states that faced several disasters in the form of floods and cyclones. Despite so many on-ground challenges like tough and restricted terrains, unavailability of relief material, and vast geographical spread, we provided immediate relief, ensuring affected communities received essential supplies on time. Over 33,000 relief kits were distributed in Bihar, Uttar Pradesh, and Telangana, aiding recovery and resilience. This immediate relief effort underscored our dedication to supporting communities in times of crisis. agriculture practices. Besides this, in Maharashtra, we continued our efforts in building the capacities of 120 Water User Groups (WUGs) in seven districts of Marathwada region. Our Social Inclusion initiatives encompassed impactful programmes in road safety (YOUth Drive for Safety) for two-wheeler drivers in Delhi NCR, pilot programme in skilling under Banking, Financial Services and Insurance (BFSI) sector in Salem, Tamil Nadu. The ‘YOUth Drive for Safety’ project in Delhi NCR sensitised more than 1,00,000 youth and community members on safe and defensive driving practices like Street plays (Nukkad Nataks), Drunk Buster (using Drunk Buster impairment goggles), Good Samaritan (awareness on rules of Good Samaritan Law), Be Shine – Be Seen (conspicuity tape pasting), and traffic management through wardens. Furthermore, our pilot project in skilling, successfully trained 200 youths, who subsequently secured employment in the BFSI sector. We have amplified our CSR initiatives by adopting various communication strategies like extensive wall In the realm of Climate Impact Management, our flagship projects, Project Prakruti and Jalvaibhav 2.0, made substantial strides in the state of Karnataka. Under Project Prakruti 1,00,000+ horticulture saplings covering an area of more than 250 acres were planted Pavagada, Tumkur, Karnataka, contributing to expanding green cover as well as enhancing farmers income. Jalvaibhav 2.0 in Kolar, Karnataka focused on sustainable water resource management by constructing 58 water structures and setting up 30 Farmer Field Schools for promoting climate resilient paintings in project villages, releasing a coffee table book titled ‘संKALAN’, a compilation of transformative and inspirational stories of Digital Sakhis and women entrepreneurs, audio and video podcast series, partnership with AIR (All India Radio) Gulbarga on financial literacy, press conferences during the project launches, social media posts and press releases in the print media. These achievements have garnered significant recognition, including the renewal of ISO 26000:2010 – Social Responsibility Certificate of Conformance, ASSOCHAM CSR & Sustainability Awards 2023 for Excellence in Diversity, Inclusion & Women Empowerment, and the FAME National Award 2024 for Best CSR Practices. We have also won the ICC Awards 2025 in the Mega Enterprise category. Looking ahead, we plan to scale our Digital Sakhi programme, as well as expand climate resilience initiatives, and strengthen our disaster response framework. By leveraging technology and partnerships in CSR, we aim to maximise social and environmental impact, ensuring inclusive and long- lasting change for communities at large. Corporate Overview Statutory Reports Financial Statements L&T Finance 117
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Manufactured and Intellectual Capital Conducted Double Materiality Assessment with Internal and External Stakeholders (390+ Responses) Business Impact Study for all Business Portfolios Launch of PLANET 3.0 (Beta) and New Website 2,297 Total Branches (including Head Office) 91% Rural Branches 13,000+ Distribution Touchpoints Cloud-Based IT Infrastructure AI/ML-Driven Risk Assessment and Automation Multi-bureau Credit Analysis (CIBIL, CRIF Highmark, Equifax, Experian) Customer360 API for Risk Monitoring Video KYC for Seamless onboarding Implementation of Project Cyclops Deployment of KAI, an AI-driven Home Loan Chatbot, for Real-time Customer Query Resolution Financial Capital Longer Tenure of Borrowing 19% Y-O-Y Retail Book Growth ₹ 92,247 Cr Borrowings ₹ 20,480 Cr Sustainability Focused/Priority Sector Loans 3.35 Debt-To-Equity Ratio ₹ 2,494.86 Cr Equity Share Capital Human Capital Implementation of C.U.R.V.E. of Happiness Philosophy Initiatives 36,521 Total Employee Base Focus on DE&I - Women Hiring, Gamified Learning on Biases, Policy Review Using DE&I Lens 18% Women in Senior Management Roles ₹ 4,471/Fte Spent on L&D Programmes & Workshops Anonymous Company-Wide Great Place to Work (GPTW) Survey Conducted Site-Level Hazard Identification & Risk Assessment (HIRA) Conducted in 25 Branches Safety initiatives like Emergency Ambulance Services, Road Safety initiatives, and Distribution of Helmets to all Active Frontline Employees Meal Facilities for Employees Living Beyond 50 Km Radius of Meeting Centres Initiatives Undertaken to Ease Employee Commute Experiences Rural Business Finance Rural Group Loans & Micro Finance (JLG) Micro LAP Urban Finance Two-Wheeler Finance Home Loans and LAP Personal Loans SME Finance SME Loans to Professionals & Traders (including Supply chain) Farmer Finance Farm Equipment Finance Agri Allied Finance Business Activities Ambition Pride Discipline Integrity Vision & Values Carbon Neutrality by FY35 Maintain Water Positive/ Surplus Status Long-term Objectives Inputs Value Creation Model Unlocking Potential, CREATING LASTING VALUE Value Creation Model Integrated Annual Report 2024-25118
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Financial Capital 92 lakh+ Active Customers ₹ 2,644 Cr Net Profit (Highest-ever Annual PAT) 10.59% Net Interest Margin+Fees 22.27% Capital Adequacy Ratio Retailisation with 97% of Overall Book RoE: 10.87% RoA: 2.44% (Highest-ever Annual RoA) Dividend of ₹ 2.75 per Equity Share (highest ever) ~19% increase in Retail Investors Financial Capital Better Quality of Life Financial Independence Better Returns for Investors and Shareholders Increased Retail Investors Confidence Employees Investors Regulators Customers Vendors Community Employees Investors Regulators Customers Vendors Community Employees Investors Regulators Customers Vendors Community Human Capital 21,900+ New Hires 5.4% of Women in Workforce with 4.5x Increase in Women Frontline Roles in Rural Business Finance 3.5% Reduction in Attrition Rate 38.5 Average Learning Hours per Employee 100% Employees Trained on ESG Mandatory Module Conducted HIRA to Highlight Gaps ISO 45001:2018 (OHSMS) Certification Achieved for Head Office Human Capital Diversity & inclusion Skill Enhancement of Employees in Coveted Domains Enhanced Productivity and Improved Stakeholder Confidence Reputation enhancement Employee health and safety Employee well-being Manufactured and Intellectual Capital Double Materiality Matrix and Risk and Opportunities Increased Customer Database- ~2.6 Cr ₹3,800 Cr+ Digital Collections through PLANET App 685 lakh+ Customer Servicing Experience 16 lakh Rural Customers (PLANET App) ₹215 Cr Disbursements (Tech partnerships) Disbursements Growth: Y-o-Y 16% (Farmer Finance), 37% (SME Finance), 42% (Personal Loans), 27% (Housing Loans & LAP) Loans to Repeat Customers (by Value): ~35% Manufactured and Intellectual Capital Financial and Digital Inclusion Stakeholders Needs, Expectations and financial Impacts Identified for ESG Roadmap Increased Customer Penetration True Value of Business Impact on Environment and Society Improved Customer Satisfaction and Experience Digital agreements using digital authentication Improved decision-making Improved Customer Base with Low Credit Risk Risk Credit Risk Market Risk Reputation Risk Model Risk Cyber Risk Operational Risk Legal Risk Strategic Risk Regulatory Risk Fraud Risk 1 2 3 4 5 6 7 8 9 10 Output Value Created/ Preserved/ErodedOutcome Risk 1 2 3 4 5 6 7 8 9 10 1 3 4 5 6 10 3 5 6 8 9 10 Corporate Overview Statutory Reports Financial Statements L&T Finance 119
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Social and Relationship Capital ₹ 30 Cr CSR Expenditure Initiatives towards Achieving CSR Roadmap 2 SIA Conducted for CSR Projects by Independent Organisations Robust Grievance Management Process Established Adopted an International Guidance to Embed CSR into your Company’s Operations Amplified CSR Communications Enhanced NPS Methodology to Capture Customer Sentiment Across Multiple Touchpoints Implemented Value Chain Engagement Plan Natural Capital ~18,242 GJ of Renewable Energy Plus Green Attributes in Total Operations Energy Audit and Assessment Conducted in 50 Branches Waste Assessment Conducted in 50 Branches 58 New Water Structures Constructed and Maintained in 134 villages 1 lakh+ Saplings Planted Digitalisation Leading to Reduction in Customer Travel Emission Adopted International Standards, like PCAF Estimating Financed Emissions for select Retail Portfolios Employee Shuttle Services Provided - Head Office and few Branches Signatory to PCAF Supporting Clean Mobility by Financing 64,000+ EVs UN SDG Alignment Inputs Value Creation Model Government & Regulatory Environment Evolving Digital Infrastructure Evolving Customer Needs Climate Change Socioeconomic Condition External Drivers Enhancing Customer Acquisition Sharpening Credit Underwriting Implementing Futuristic Digital Architecture Heightened Brand Visibility Capability Building Pillar Strategy to Deliver on Lakshya Goals5 Manufactured and Intellectual Capital Strengthening of Data Security through a Zero Trust Policy and Advanced System Protection Measures R.AI.SE Campaign and AI Classrooms to Foster Learning and Innovation in Financial Services BigTech Partnerships Integrated Annual Report 2024-25120
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Social and Relationship Capital Creating Employment Opportunities for Women Enhanced Digital & Financial Literacy of Rural Women Maintain NPS Score Better Economic Growth Reputation Enhancement Transparency Creating a Sustainable Supply Chain Informed Decision-Making Natural Capital GHG Intensity Reduction Climate-Resilient Lending Practices Water Positive/Surplus Status Positive Impact on Biodiversity On Track to Become 'Carbon Neutral' by 2035 Increased Operational Efficiency Employees Investors Regulators Customers Vendors Community Employees Investors Regulators Customers Vendors Community Employees Investors Regulators Customers Vendors Community Social and Relationship Capital Renewal of ISO 26000:2010 Social Responsibility Certification Achieved Launched Transformative Stories through संKALAN 61.06 Women Beneficiaries Receiving Rural Group Loans & Micro Finance 39% of Customer Complaints Reduced 1,110 Number of Digital Sakhis 10,500 Number of Upskilled Women Entrepreneurs 100+ Farmers Benefitted Economically through Horticulture- Based Income Generation 12,000+ Farmers Supported with Sustainable Water Management Practices 1.25 lakh+ Beneficiaries Impacted through Disaster Relief Management 0 Complaints were Received Regarding Breaches of Customer Privacy from Customers, Outside Parties, or Regulators Conducted ESG Maturity of 75% Value Chain Partners Adoption of the Sustainable Procurement Policy and the Annual ESG Value Chain Meet Manufactured and Intellectual Capital Optimised Operational Efficiency Strengthened Position as a Digital-First Financial Services Provider Output Value Created/ Preserved/ErodedOutcome Risk Manufactured and Intellectual Capital Implementation of ISO 27001, ISO 20000 System, ISO/IEC 2000:2018, ISO/IEC 27000 100% Digital Disbursements (Rural + Urban) 85% of Self-Service Transactions Facilitated through the PLANET App Natural Capital ~176 lakh KL of water replenished ~3,692 tCO2e avoided from operations through renewable energy Avenues identified for energy and cost savings ~33% of the Company's operation from green energy 50,861 Kg of waste recycled, i.e. 19% diverted from landfills ~973 tCO2e sequestered 39 flora and 69 fauna species identified at Miyawaki plantation site 100% paperless Journey in four business portfolios ISO 14064-2:2019-certified for Miyawaki plantation project ~12,675.67 tCO2e avoided through EV Financing Risk Credit Risk Market Risk Reputation Risk Model Risk Cyber Risk Operational Risk Legal Risk Strategic Risk Regulatory Risk Fraud Risk 1 2 3 4 5 6 7 8 9 10 3 5 7 9 10 3 6 7 8 9 Corporate Overview Statutory Reports Financial Statements L&T Finance 121
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Through ESG, a company balances its growth with responsibility to the planet, its people, and future generations. At LTF, achieving this balance is a principle that defines its approach. Your Company believes that strong ESG practices lead to stronger companies, communities, and economies. In the face of escalating climate risks, social inequalities, and shifting standards, your Company has made ESG a keystone of its strategy. FY25 has been about further sharpening LTF’s strategy to strengthen this commitment, enabling your Company to refine its sustainability roadmap, set clearer priorities, and implement targeted initiatives that create tangible impact. By embedding sustainable practices into its operations and decisions, your Company is not only meeting today’s demands but also charting a future that aligns with stakeholder values, fostering resilience, inclusivity and long-term growth with value creation. In today’s complex and dynamic environment, the relevance of Environmental, Social, and Governance principles has reached a pivotal point. Stakeholders ranging from regulators to investors and consumers demand accountability, making the integration of ESG strategies an essential business mandate rather than a choice. PLANETPEOPLEFUTURE GENERATIONS ESG – A Catalyst for Responsible & SUSTAINABLE GROWTH & IMPACT ESG@LTF Integrated Annual Report 2024-25122
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Over the past years, your Company has consistently demonstrated foresight in embedding ESG considerations into its operations, championing sustainability, being transparent & accountable before it became a regulatory mandate. By taking bold steps ahead of its time – voluntarily reporting BRSR before it was mandatory, implementing 3rd party assurance proactively without any ask from the regulations, and voluntarily adopting the IIRC framework to add transparency to its disclosures – your Company has not just kept pace with change but driven it. In FY24, your Company made significant progress by aligning its tree plantation programme with ISO 14064-2:2019—an international best practice for carbon enhancement and sequestration—by getting one of its project sites certified. Your Company took a proactive approach and estimated its carbon emissions from select portfolios (Two-Wheeler Finance, Farm Equipment Finance and Home Loans). This made your Company one of the first in the Indian NBFC and Banking sectors to calculate and disclose carbon emissions of its retail portfolio in FY24 and FY25. These pioneering efforts have set new industry benchmarks, reshaped the standards of corporate transparency and responsible reporting, and reinforced LTF’s leadership in shaping the future of corporate governance. As one of the few NBFCs in India, LTF became signatory to the global initiative, Partnership for Carbon Accounting Financials (PCAF) in FY25. By joining PCAF, LTF furthers its efforts to transparently measure and report portfolio emissions, enabling it to manage climate risks more effectively and contribute meaningfully to India’s Net-Zero ambition by 2070. These initiatives strengthen stakeholder trust, attract investors, and solidify LTF’s position as a future-ready, ESG-driven organisation aligned with global sustainability standards. LTF started its journey towards sustainability in FY19 and moved from disclosures based on existing practices to enhanced disclosures and certifications, and finally embarking on the journey of building an ESG- conscious organisation. Corporate Overview Statutory Reports Financial Statements L&T Finance 123
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Sustainability Journey @ LTF By integrating sustainability into its core operations, LTF strives to balance growth with environmental stewardship and social responsibility. Through proactive initiatives in green and social finance, resource efficiency, and inclusive business practices, your Company is continuing to strengthen its role as a responsible corporate citizen, ensuring a positive impact on the economy, society, and the environment. Amongst 1st NBFCs to Conduct Double Materiality Amongst 1st to Calculate and Report Financed Emissions for Select Retail Portfolios Amongst 1st NBFCs to Become Signatory to Partnership for Carbon Accounting Financials (PCAF) Disclosure of BRSR Core Parameters in Advance of Regulatory Deadline Conducted its Maiden Business Impact Study, TCFD/RBI Climate Risk Study Launched its Inaugural ‘Sustainable Finance Framework’ and Obtained 2nd Party Opinion from CRISIL Grew its Sustainable Finance/ Priority Sector Lending portfolio to ₹ 9,444 Cr Achieved Top-Notch ESG Ratings Published First Integrated Report in FY22 Among the First in Industry to Map BRSR in Sustainability Report Set Carbon Neutrality & Water Neutrality Targets Setup Board-level ESG Committee Comprising Independent Directors Material Assessment Undertaken (Internal and External Stakeholders) Remained ‘Constituent’ on FTSE and Included in CDP Adopted ESG targets (Business and Operations) Constitution of Sustainability Taskforce Gap Assessment on Sustainability Readiness Published Sustainability Report 1 st Material Assessment Applied for S&P Global Corporate Sustainability Index Became a 'Constituent' on FTSE4Good Index Series Phase I Phase II Phase III FY21 - FY22FY19 - FY20 FY23 - FY25 Building ESG-conscious organisation Enhanced disclosures and certification Disclosure basis existing practices Integrated Annual Report 2024-25124
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LTF’s ESG journey is defined by concrete actions and a clear focus on meaningful outcomes for positive business impact. ESG has transcended its role as a separate function to become a fundamental pillar of your Company’s strategy, ensuring that every decision is purposefully integrated and aligned with the creation of long-term value driven by a compelling ESG Vision and a set of specific ESG goals. Commitment to ESG Excellence Visi n G als ESG ESG To be an environmentally and socially responsible financial institution built on the foundation of ‘Assurance’, focused on generating sustainable long-term value for all our stakeholders. Ensure profitability with ethical, environmental and social responsibility. Integrate ESG practices into LTF’s business, operations and value chain. Achieve ‘Best-in- Class’ ESG Ratings. LTF is committed to integrating ESG principles into all its service and products and to drive sustainability and promote an equitable and resilient future. LTF has taken significant steps in FY25 to review, recalibrate and redesign all aspects of ESG, including ESG governance system, policies, ESG business impacts, and roadmap for the next 5 years to strengthen the ecosystem. Corporate Overview Statutory Reports Financial Statements L&T Finance 125
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Strengthening of the ESG Governance Structure - The Cornerstone of LTF's Excellence In FY25, LTF strengthened its ESG governance framework with the aim of further enhancing ESG integration into your Company’s operations by establishing the Sustainability Steering Council (SSC). The SSC serves as a strategic council and leads the charge on environmental and social initiatives, ensuring their integration with your Company’s long-term goals. Sustainability Steering Council (SSC) Sustainability Team CSR and ESG Committee Board Integrated Annual Report 2024-25126
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The comprehensive ESG policy framework that underpins your Company’s operations continues to guide its relentless commitment to sustainability and responsibility. With policies continually refined to address both evolving challenges and new opportunities, your Company ensures its actions yield measurable results while remaining aligned with global standards and stakeholder expectations. All ESG policies are approved by the Board, based on recommendation by the SSC and CSR and ESG Committee. In FY25, a special lens was applied to all ESG policies reviewing them specifically from the DE&I perspective and changes were made accordingly. The introduction of the Sustainable Procurement Policy in FY25 is aimed at reinforcing the Company’s position as a responsible, future-oriented organisation. Key sustainability-related policies implemented by LTF include: ESG Policies – Laying the Foundation for Sustainable Leadership ESG Policy LTF’s ESG Policy serves as the compass for embedding environmental, social, and governance principles into its core decision-making. This framework enables your Company to effectively mitigate significant risks and capitalise on emerging opportunities, delivering value to all stakeholders. It serves as a guiding document for the initiatives undertaken by LTF. It also consists of the Exclusion List, a key measure to ensure responsible lending practices. This policy explicitly prohibits lending to industries and activities associated Health and Safety Policy This policy affirms LTF’s persistent commitment to creating and upholding a safe, supportive and thriving work environment. The primary objective of this policy is to enhance the health and safety performance of LTF and its employees continually. It also outlines the necessary measures and guidelines required to achieve this objective, emphasising the importance of a proactive approach to safety management. New initiatives under this policy in FY25, include the completion of Hazard Identification and Risk Assessments ('HIRA') across 25 branches, proactively addressing potential risks. The Head Office has achieved ISO 45001 certification, demonstrating adherence to with high environmental or social risks, including mining and thermal energy projects. To align with your Company’s ambitious sustainability goals, the policy has been updated to support LTF’s journey towards carbon neutrality by FY35 with renewed focus on renewable energy. To access the policy, please refer to the 'Policy Compendium' section. the highest global standards in occupational health and safety. Various other preventive measures, such as providing road safety training and helmets, were undertaken to ensure the health and safety of employees. To access the policy, please refer to the 'Policy Compendium' section Diversity, Equity, and Inclusion ('DE&I') Policy LTF is dedicated to fostering a workplace where diversity and inclusion are just not valued but embedded in every aspect of its operations. Your Company recognises the distinct talents, experiences, and viewpoints that each individual brings, cultivating a culture rooted in fairness, respect, and equality. This policy underscores LTF’s commitment to driving diversity, inclusivity, and equity, both within the organisation and across its value chain. In FY25, your Company upgraded its DE&I Policy, ensuring that the workplace remains more inclusive and just. Moving beyond traditional gender norms and to create a workplace that is genuinely inclusive of all gender identities a key advancement of revising the POSH policy to a gender-neutral policy was made. A dedicated DE&I Council has been formed, focussed on improving diversity across your Company—especially among field-level staff—resulting in a fourfold increase in the number of women personnel at the field level in Rural Business Finance. To access the policy, please refer to the 'Policy Compendium' section Corporate Overview Statutory Reports Financial Statements L&T Finance 127
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Human Rights Policy In line with global standards such as the UN Guiding Principles for Business and Human Rights, this policy reflects your Company’s dedication to upholding the rights of all stakeholders. Your Company has committed to respecting human rights, outlined in its Human Rights Policy. This policy serves as a framework for ensuring the protection of human rights, which LTF views as an integral component of responsible business practices. During FY25, grievance redressal mechanisms were strengthened to proactively address potential violations, while specialised training was conducted to foster a collective understanding of human rights across the organisation and its value chain. To access the policy, please refer to the 'Policy Compendium' section Environment Policy LTF is committed to reducing its environmental impact by fostering sustainable business practices. This includes promoting compliance, environmental stewardship, and a culture of sustainability among employees, customers, and suppliers. The Environmental Policy provides a structured framework to ensure safe, eco-friendly operations and adherence to legal obligations. Currently, 33% of LTF’s operations are already powered by green energy, reflecting significant progress in its sustainable energy transition. To access the policy, please refer to the 'Policy Compendium' section Data Privacy and Cybersecurity Policy LTF’s Data Privacy Policy outlines the Reasonable Security Practices and Procedures implemented for the sharing, use, and disclosure of personal information provided by customers to your Company, whether in person or through digital platforms and/or any information pertaining to your Company. Sustainable Procurement Policy As a strategic extension of your Company’s ESG framework, the Sustainable Procurement Policy is designed to weave sustainability into every step of the procurement process. This policy ensures that suppliers and vendors adhere to rigorous ethical, social, and environmental standards. Through close collaboration with its value In reinforcing its dedication to safeguarding customer and business data, LTF has enhanced its Data Privacy and Cybersecurity initiatives. Beyond retaining the ISO 27000 and ISO 20000:2018 certifications, your Company introduced new cybersecurity training for grievance call centre employees, ensuring they are equipped to manage fraud incidents, while safeguarding data accuracy and security. To access the policy, please refer to the 'Policy Compendium' section. Integrated Annual Report 2024-25128
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E-waste Policy LTF’s E-waste Policy underscores its commitment to environmental responsibility by ensuring the safe and sustainable management of electronic waste across all its operations in India. In line with regulatory requirements, LTF, as a bulk consumer, does not store e-waste for more than 180 days before transferring it to authorised recyclers approved by the Ministry of Environment and Forests or Central/ State Pollution Control Boards, while maintaining comprehensive records for compliance. LTF upholds a ‘Zero Waste to Landfill’ commitment, mitigating environmental risks associated with hazardous substances like cadmium, lead, and mercury. Dedicated e-waste collection points near hub locations further streamline responsible waste handling. To access the policy, please refer to the 'Policy Compendium' section Sustainable Finance Framework Your Company has established a Sustainable Finance Framework ('SFF') with the intent to drive positive environmental and social change by channelling investments into impactful projects aligned with the UN SDGs. This framework strengthens LTF’s ability to finance and refinance initiatives that contribute to sustainability while ensuring transparency, credibility, and effectiveness in sustainable finance. For further details about the SFF, please refer to the Financial Capital. chain partners, your Company promotes responsible sourcing by embracing practices like using recycled papers, deploying energy- efficient appliances, and procuring green power for its operational facilities. This commitment contributes to the development of a more sustainable and ethically responsible supply chain. To access the policy, please refer to the 'Policy Compendium' section Third-Party Code of Conduct The Third-Party Code of Conduct outlines the expectations and standards for responsible business practices that third parties must adhere to when engaging with your Company. It emphasises compliance applicable laws and regulations, the avoidance of conflict of interest, and prohibits the offering or acceptance of gifts and entertainment intended to influence business decisions. The code also enforces a zero- tolerance policy towards bribery and corruption, requiring third parties to maintain ethical conduct in all interactions. Additionally, it underscores the importance of environmental stewardship and socially sustainable practices, aligning with LTF's commitment to high standards in these areas. To access the policy, please refer to the 'Policy Compendium' section Corporate Overview Statutory Reports Financial Statements L&T Finance 129
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ESG Strategy Your Company’s commitment to sustainability is deeply embedded in its strategic vision—Lakshya 2026. LTF remains committed to its journey of becoming a digitally enabled retail finance company with sustainability at its core. This commitment is reflected in its structured ESG approach and public commitments, which focusses on governance and leadership, climate action and stewardship, climate risk mitigation, social impact and sustainable finance as key pillars of long-term value creation. Your Company has set public, long- term, middle-term and short-term ESG targets and has been achieving them. In 2022, LTF committed to becoming carbon neutral by FY35 and is actively taking steps to reduce the carbon footprint of its operations. Significant steps have already been taken in this direction and your Company is well on track to achieve the same. Also, since FY23, LTF has retained Water Surplus status assured by a third party. LTF has integrated ESG accountability at the highest levels, ensuring leadership alignment through ESG- linked KPIs. Additionally, as an early adopter of decarbonisation strategies and financed emissions baselining, LTF is contributing to India’s 2070 Net-Zero goal. With a strategic focus on inclusive, and social finance, LTF is not just driving business growth but also fostering economic empowerment and environmental responsibility. Through this multi-faceted ESG strategy, LTF is reinforcing its position as a responsible financial institution, ensuring that sustainability remains central to its business transformation. A Roadmap to Sustainable Growth LTF has developed a structured five- year roadmap to drive its ESG goals with clear milestones and targets. This roadmap ensures a comprehensive approach to sustainability, covering sustainable finance, climate action, social impact and governance. By setting structured timelines and measurable objectives, LTF remains committed to continuous ESG improvement and industry leadership. Strategic Approach LTF has embarked on a structured and forward-looking roadmap to achieve its sustainability and Environmental, Social, and Governance (ESG) goals. The strategy is built on a foundation of robust assessments, vision- driven initiatives, and targeted ESG interventions to drive long-term value creation. The roadmap begins with peer analysis using maturity assessments, enabling LTF to benchmark its ESG performance against industry best practices, both Indian and global. It is further strengthened by Double Materiality Assessment, ensuring a comprehensive understanding of the financial and societal impact of sustainability risks and opportunities. Guided by its ESG vision and goals and strategic pillars, LTF has outlined a detailed ESG/Sustainability roadmap. This roadmap is translated into well-defined ESG targets & key performance indicators (KPIs), aimed at achieving the following outcomes: Transformative Leadership in ESG LTF aspires to be a frontrunner in ESG by setting new industry standards and driving positive change. Through proactive initiatives, your Company aims to influence the broader financial ecosystem and establish itself as a sustainability leader. High-Quality Disclosures for Regulatory Compliance Strengthening transparency and accountability, LTF aims to ensure best-in-class ESG disclosures that meet and exceed regulatory requirements. By maintaining rigorous reporting standards, your Company’s focus is to instil investor confidence and stakeholder trust. Sustainable Finance – Attract Investors & Collaborative Projects By embedding sustainability into its financial decisions, LTF aims to attract ESG-conscious investors and foster impactful collaborations. This approach not only supports responsible lending and investments but also aligns financial growth with environmental and social progress. Integrated Annual Report 2024-25130
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Proactive Management of Sustainability Risks With a strong ESG risk management framework, LTF is aligned to anticipate and mitigate sustainability- related risks. This proactive stance enhances business resilience, ensures regulatory adherence, and supports long-term operational stability. Resource & Cost Optimisation Sustainability and efficiency go hand in hand, and LTF’s approach is focused on optimising resource utilisation while reducing costs. Leveraging digital innovations and green initiatives, your Company is determined to drive operational excellence and minimise its environmental footprint. Best-in-Class ESG Ratings Through consistent ESG integration and performance improvements, LTF seeks to achieve top-tier ratings from national and international rating agencies. These ratings will reinforce its position as a responsible financial institution. Building the ESG Roadmap - Approach Objective Inputs Adopt & Implement KPIs Outcomes Sustainable ESG Leadership ESG Vision & Goals & LTF’s 5 Strategic Pillars Double Materiality Assessment Peer analysis using maturity assessment Short-Term Long-Term Mid-Term Attracting Funds (Equity + Debt-Sustainable Finance) Enhanced Risk Management (Including Sustainability Topics) Transparent Disclosure & Regulatory Compliance Operational Efficiency Best-in-Class ESG Ratings Industry Leaders in Sustainability Practices For further details please refer to the section on Materiality Assessment. Corporate Overview Statutory Reports Financial Statements L&T Finance 131
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Integrating ESG into Operations Under the Lakshya 2026 plan, LTF has made Environmental, Social, and Governance (ESG) principles as an essential component of its strategic plan. Towards building an ESG-conscious organisation, 100% of employees have been trained on various aspects of ESG. Additionally, bespoke trainings on financed emissions, double materiality and value chain and health & safety were conducted. The impact of your Company’s ESG- driven initiatives is evident in the following ways across its operations: ESG Integration across Branches Every new branch is subjected to an ESG evaluation to ensure alignment with energy efficiency, safety, and inclusivity standards. This ensures the installation of renewable energy systems wherever feasible, which plays a key role in reducing your Company’s carbon footprint. Furthermore, by incorporating water conservation efforts and effective waste management practices, the consumption of natural resources and the environmental footprint are significantly minimised. Sanitation facilities and its ratio to employees, PWD access, Health & Safety aspects are also evaluated. Thorough hazard identification and risk assessments are conducted at branches as per the annual plans, reinforcing occupational health and safety standards. Establishment of the Sustainability Steering Council (SSC) LTF has strengthened the governance system with the aim to further enhance ESG integration into operations by appointing the Sustainability Steering Council. The SSC leads the charge on environmental and social initiatives, ensuring their integration with your Company’s long-term goals. Financial Inclusion as a Driver of Impact LTF has made significant progress in advancing financial inclusion through its business, ESG and CSR initiatives. These efforts enrich both internal operations and external business activities, with a strong emphasis on empowering rural communities and uplifting women entrepreneurs. Key aspects include: Investment in Underserved Areas LTF has strategically invested ₹ 20,480 Cr of sustainability focused/priority sector loans, targeting access to finance, including in over 10 lagging states identified by Government of India. This strategy supports national goals of financial inclusion and rural development, aiming to bridge the gap between urban and rural financial ecosystems. Through its sustainability focused loans, LTF has attracted funds towards Indian low-income states, women, farmers and generating livelihoods. These sustainability- focused loans have not only contributed to creating positive social and environmental impacts but also drive economic growth and enhance accessibility and livelihood in underserved areas. Women Empowerment Central to LTF’s strategy for financial inclusion is the provision of microloans to women entrepreneurs. These loans foster economic self- sufficiency and business development in underserved areas, allowing women to launch and expand their businesses. Beyond empowering women, this initiative stimulates the local economy, generating employment and enhancing community resilience. ESG and Climate Risk Management Recognising the importance of ESG and climate risks, LTF has established robust processes and structures to manage these risks effectively. Your Company has undertaken a TCFD-aligned study to enhance its preparedness in mitigating climate-related risks, ensuring long-term sustainability and resilience. Integrated Annual Report 2024-25132
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Measuring Impact through Business Impact study LTF has made remarkable headway in assessing its business impact through a comprehensive Business Impact Study, designed to quantify the value generated by its operations, while enhancing its sustainable finance initiatives. Customer-Centric Approach LTF remains committed to customer centricity and continuously tracks its Net Promoter Score (NPS) to measure customer satisfaction and improve service offerings. This focus reinforces its dedication to enhancing customer experiences and building long-term relationships. An online Cybercrime Awareness and Fraud Prevention Training Programme was designed for LTF’s Customer Service Team and Call Centre Agents. The programme equipped ~200 employees with the knowledge and skills to recognise cyber fraud, identify fraudulent activities, and guide customers effectively while ensuring compliance with regulatory standards. Trained by India’s foremost experts in cybercrime investigation, this initiative aimed at enhancing your Company’s customer service excellence and customer trust Employee Engagement and Workplace Excellence To foster a positive work environment and gather valuable employee feedback, LTF implemented the GPTW survey. As a result, your Company was recognised as a Great Place to Work, reflecting its commitment to employee well-being, engagement, and organisational excellence. Prioritising customer centricity, risk management, strong governance, and community engagement in all endeavours, these principles serve as the bedrock of strategic drivers. They guide LTF in delivering exceptional experiences to its customers and employees, while also ensuring sustainable performance and generating long-term value for its shareholders, including customers, communities, and value chain partners. LTF's initiatives have a quantifiable impact, demonstrated by the following statistics: Sustainable Finance Your Company secured ₹ 20,480 Cr in loans, all directed towards projects supporting the UN SDGs. Social Value Creation For each ₹ 1 spent on social initiatives (Digital and Financial Inclusion), LTF generated ₹ 123 in social value (FY23-24). Policy Advocacy To make an industry-wide change, LTF has been responding to consultation papers issued by regulatory bodies related to sustainable finance, ESG requirements and other regulatory matters. 54 Net Promoter Score (NPS) Corporate Overview Statutory Reports Financial Statements L&T Finance 133
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Structured Stakeholder Feedback through Double Materiality LTF’s commitment to responsible growth is reflected in its Double Materiality Assessment, a strategic approach that evaluated both financial risks and the broader environmental and social impacts of its operations. This comprehensive process involved engaging with diverse internal and external stakeholders, including Board members, Senior Management and other employees, frontline employees, dealers, lenders, and customers, to gather feedback on the critical material topics identified through benchmarking and industry trends. By incorporating both quantitative surveys and qualitative insights, LTF ensured that its business decisions aligned with stakeholder expectations, fostering long-term value creation and reinforcing its commitment to sustainability and societal impact. For further details please refer to section on Materiality Assessment. Driving Impact, Together: LTF’s 1st ever Value Chain Connect on ESG LTF hosted its first in-person ESG Value Chain Partners Meet on August 29, 2024. The event brought together key stakeholders, including leading banks as well as investors, to discuss ESG best practices, innovative strategies, and success stories. This initiative, building on LTF’s virtual engagements since FY23, reinforced collaboration and commitment to sustainable business practices, strengthening ESG awareness and integration across its value chain. Board Training on Double Materiality & Climate Risk Your Company has taken a pioneering step by becoming one of the first NBFCs in India to adopt the Double Materiality Assessment – setting a new benchmark for the industry. Acknowledging that materiality today encompasses not just financial relevance but also social and environmental impact, your Company initiated a far- reaching transformation to embed this advanced approach into its governance structure. To institutionalise this shift, the Board and the Senior Management underwent structured sessions. These sessions went beyond awareness- building, empowering leadership to anticipate stakeholder expectations and the corresponding financial impact. This initiative underscores your Company’s belief that true leadership is demonstrated through decisive action. By aligning long-term strategy with stakeholder priorities and sustainability imperatives, your Company is actively shaping the future of responsible business. Integrated Annual Report 2024-25134
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Case Study Introduction At LTF, employee health and safety are top priorities, and your Company continuously enhances its policies and practices to ensure a safe and supportive work environment. This case study highlights key efforts and milestones in LTF’s health and safety approach. Comprehensive Health and Safety Approach LTF’s strategy focusses on proactive measures, employee engagement, and global standards to maintain a safe workplace. Key Outcomes LTF’s efforts have led to: Zero non-conformities in the ISO audit. Increased employee participation in safety initiatives. Reduced road-related accidents and improved mental well-being among staff. Looking Ahead LTF plans to expand ISO 45001 certification to additional locations and continue investing in employee safety and well-being, ensuring a safe, healthy, and supportive work environment. ISO 45001 Certification LTF’s Head Office achieved ISO 45001 certification, demonstrating adherence to global safety standards. This certification enhances safety culture, compliance, and stakeholder confidence. This was achieved through: Risk assessments and hazard mitigation across branches. Active employee engagement in safety practices. Rigorous audits resulting in zero non-conformities. Field Employee Safety LTF has prioritised road safety for its field employees, providing helmets and safety gear to its frontline staff. A road safety training module has been launched, and a safety pledge was introduced for Rural Business Finance (RBF) teams to promote safety accountability. Mental Well-Being Support LTF recognises the importance of mental health. The Emotional Well- Being Helpline offers employees confidential support, ensuring holistic care beyond physical safety. For further details about the Health and Safety Initiatives, please refer to section on Human Capital. LTF’s Commitment to Health & Safety Excellence Corporate Overview Statutory Reports Financial Statements L&T Finance 135
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Ensuring Environmental Stewardship In FY25, LTF reinforced its commitment to sustainability through key environmental initiatives focused on water conservation, energy efficiency, carbon neutrality, and waste management. A major milestone was the revamping of the Sewage Treatment Plant (STP) at its Head Office, enhancing recycling capacity and reducing freshwater dependency. LTF also expanded its renewable energy adoption, sourcing green energy for a growing number of operational sites while optimising energy consumption through advanced technologies and real- time monitoring. Energy audits were conducted to assess usage patterns, identify efficiency improvements, and enhance overall energy performance. Under its ‘Project Prakruti’ initiative, LTF planted 1,00,000+ saplings, leveraging afforestation methodologies for carbon sequestration. Additionally, a comprehensive waste management assessment across top branches strengthened transparency and resource efficiency. Through these initiatives, LTF continues to drive sustainable business practices, minimise its environmental footprint, and contribute to a greener future. For further details about the Environmental Initiatives, please refer to the section on Natural Capital. Empowering Employees through Sustainability Skills In August 2024, LTF ESG hosted a Financed Emissions capacity- building workshop to enhance internal stakeholders’ understanding of climate-related financial risks. Conducted by experts, and attended by employees from different departments, the workshop provided in-depth insights into calculating and managing financed emissions. LTF actively engaged employees in ESG initiatives, encouraging their participation in the development of HIRA, conducting safety assessment visits, and supporting the implementation of ISO 45001 at the Head Office. Their efforts strengthened risk mitigation, workplace safety, and compliance, reinforcing a strong safety culture and aligning operations with global best practices. Sensitising Managers with Gamified DE&I Learning LTF launched its first-ever gamified Diversity, Equity, and Inclusion (DE&I) e-learning module to help junior and middle management employees identify and address unconscious biases in their decision- making and workplace interactions in an innovative manner. Designed as an interactive, scenario-based experience, the module engages Business Leaders, Operational Leaders and Junior Management. Available in 8 languages, it immerses participants in real-life workplace scenarios where they earn puzzle pieces representing bias-related situations, fostering critical thinking and deeper DE&I understanding. The module saw a tremendous response, with over 85% of participants completing it within three months of its launch. This transformative tool has empowered employees to become champions of diversity and equity in their managerial roles. For further details about the DE&I Initiatives, please refer to the section on Human Capital. Integrated Annual Report 2024-25136
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Performance ESG in FY25 Creating Lasting Change In FY25, your Company remained resolute in its commitment to ESG principles, which are integral to fostering a sustainable and inclusive future. By embedding ESG into its operations, LTF drives value for stakeholders and makes a significant positive impact on society and the environment. The progress achieved reflects a deep commitment to ethical practices, environmental responsibility, and social equity, positioning your Company to further enhance its impact and contribute to a future grounded in sustainability and shared growth. Environment Social Governance Corporate Overview Statutory Reports Financial Statements L&T Finance 137
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Environment Committed to achieving ‘Carbon Neutrality’ by FY35 ~16% Reduction in (Scope 1+2 Emissions) ~33% Operational Energy Mix from Renewable Energy ~3,692 tCO2e Emissions Avoided (Green Power+ Green Attributes) 1 lakh+ Saplings Planted through ‘Project Prakruti’ Strengthened Scope 3 by Estimation of Financed Emissions in Select Portfolio ~3.8x Times of Water Consumed in Operations Replenished ~176 lakh kl Water Replenished through Jalvaibhav (Watershed Management) 64,000+ Two-Wheeler Electric Vehicles (EVs) Financed ~12,675.67 tCO2e Avoided by EV Financing ~51 tonne Waste Recycled (via, Authorised Recycler) Roadmap for Improvement in Waste Management 100% Digital Disbursements (Rural+Urban) ISO 45001:2018 Certification Achieved at Head Office for Workplace Safety Digital Collection 96%(Urban) and 33% (Rural) 100% Paperless Journey in Rural Group Loans and Micro Finance, Two- Wheeler Finance, Farm Equipment Finance, Personal Loans and SME Finance Established ESG Due Diligence Process for Opening New Branches Integrated Annual Report 2024-25138
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Social Facilitated Better Quality of Life and Higher Income-Earning Ability for customers through Rural Group Loans and Micro Loans, Two-Wheeler Finance, Farm Equipment Finance and SME Finance ~61.06 lakh+ Total Women Borrowers Imparted Training for 38.5 Hours per Employee Conducted Hazard Identification and Risk Assessment (HIRA) across All Four Zones PAN India 1 lakh Youth on Two- Wheeler Road Safety Total CSR Spend ₹ 30 Cr Active Customers across ~2 lakh Villages NPS for Customer Onboarding Process (overall NPS 54) 100% Employees Trained on Various BRSR Principles DE&I Sensitisation and Awareness Programme Conducted for Middle Management Empowered 1,110 Digital Sakhis in FY25 and 10,500 Women Entrepreneurs through CSR Initiatives ₹ 26.18 Cr Spent Over and Above the CSR Obligation of FY25 27,000+ Employees Hired From Rural India 14.20 lakh+ Community Members Sensitised on Digital and Financial Literacy he Hiring of Women Led to an Increase in Overall Women's Representation, Reaching 5.4% Impacted 16.90 lakh+ Lives through CSR Initiatives Engagement with Value Chain Partners for ESG Assessment ₹ 180 Cr Social Convergence Value 2.40 lakh+ Beneficiaries Linked to Social Schemes Raised a Total of ₹ 20,480 Cr of Sustainable Finance/Priority Sector Lending Introduction of Leadership Development Programme Corporate Overview Statutory Reports Financial Statements L&T Finance 139
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Governance 29% Women's Representation on the Board Certifications ISO 14064-2:2019 GHG Emission, ISO 26000:2010 Social Responsibility, ISO/IEC 2000:2018 Information Technology- Service Management, ISO/IEC 27000 on Information Security Management Technology Service >50% Independent Board Members Review of ESG practices by Board-level Committee 50% of Independent Directors are Women Robust Board Succession Plan Induction of new Independent Directors ahead of time Trained 100% of the Board Members on ESG and Information Security Topics Regular Newsletters were Provided to the Board, Offering Updates on the Economy, Business Performance, and ESG/CSR Activities, Among Other Topics Adopted 30 Sustainability Targets for FY26 with a Tracking Mechanism in Place Established Sustainable Finance Framework in Place with Second-Party Opinion by CRISIL 27% Women in Group Executive Committee ESG-linked KPIs for Senior Management Strengthened ESG Framework– HIRA Study and ESG due Diligence for Selection of New Branches Strengthened Leadership in Critical Functions with a Strong Advisory Bench Conducted Value Chain Assessment on ESG Principles for Top 75% of Value Chain Completed Mandatory Modules on BRSR Principles by 100% Employees Women-Centric Policies Rolled Out to Support Inclusion, Safety, and Career Progression Integrated Annual Report 2024-25140
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Business Impact Study - LTF's True Value Assessment LTF is a leading financial service provider, that caters to a diverse range of financing needs across urban and rural sectors. In FY25, your Company conducted a True Value assessment to quantify the socioeconomic and environmental impacts of its operations and services. This assessment aimed to quantify both positive and negative impacts of business operations and services in financial terms, enabling a holistic view of your Company's contributions to society. The True Value methodology was employed, which involves identifying, measuring, and valuing the economic, social, and environmental impacts of LTF's activities. The assessment procedure included data collection from various primary and secondary sources, including direct surveys with stakeholders and financial reports. The key economic, social, and environmental impacts of LTF's activities were identified through a comprehensive analysis of your Company's operations. The identified impacts were measured and, where appropriate, valued in financial terms. This involved selecting appropriate valuation factors from a comprehensive database, sourced from academic research and industry standards. The assessment helped to identify and monetise the economic impacts focused on the effects of LTF's financial activities, such as job creation, substantial tax contributions, and the provision of financial services that support economic growth. Environmental impacts were assessed based on changes to the environment resulting from LTF's operations, including efforts to reduce carbon footprint and promote sustainable practices. Social impacts were evaluated in terms of significant changes addressing pressing social challenges, such as improving financial literacy and supporting community development. The True Value assessment revealed that your Company’s activities have a socioeconomic impact that extends beyond conventional financial metrics, offering a comprehensive perspective on value creation. By internalising these externalities, the assessment highlighted the broader contributions of LTF, demonstrating your Company's commitment to sustainable development and its positive impact on society. This comprehensive approach underscores the importance of considering all aspects of value creation, beyond traditional profit and loss metrics, to truly appreciate the full extent of LTF's contributions to the environment and society at large. Your Company intends to leverage the insights of its True Value Assessment to drive strategic initiatives and enhance its sustainability efforts in the upcoming years. By integrating the assessment's findings into their decision-making processes, LTF aims to optimise resource allocation, improve operational efficiencies, and strengthen stakeholder relationships. This proactive approach will enable your Company to not only achieve their financial goals but also contribute positively to societal and environmental well-being. Moving forward, LTF is committed to continuously refining its assessment methodology, ensuring it remains a robust tool for fostering sustainable growth and creating long-term value for all stakeholders. Understand the sustainability context of the entity's activities and business relationships Identify impacts Measure and value the impacts identified Apply an impact materiality perspective to determine which impacts to include in the entity's impact accounts Engage with Relevant Stakeholders and Experts Include impacts from topic and industry-specific methodology and sustainability-related disclosures Impact accounts inform the entity's materiality assessment process I II III IV Impact Accounts Corporate Overview Statutory Reports Financial Statements L&T Finance 141
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Environmental Stewardship In FY25, LTF made significant strides in integrating sustainability across its operations, further solidifying its commitment to environmental responsibility. The following initiatives demonstrate the progress made in advancing environmental responsibility during the year: Sustainable Transportation Your Company facilitated the financing of 64,000+ Two-Wheeler Electric Vehicles (EVs) in FY25, playing a crucial role in promoting sustainable transportation and supporting India’s EV30@30 goal. This effort not only aids the transition to a low-carbon mobility landscape but also helps reduce emissions from the transportation sector. Carbon Neutrality Progress As part of its commitment to achieve carbon neutrality by FY35, your Company achieved progress in reducing its carbon footprint in FY25. Energy audits for optimisation remained a key pillar of its decarbonisation strategy, helping Afforestation and Carbon Sequestration LTF expanded its afforestation efforts by planting 1 lakh saplings under Project Prakruti, contributing to carbon sequestration. These initiatives play a crucial role in identify and implement efficiency improvements across operations. By the end of the year, 33% of operations were powered by green energy, with one additional branch transitioning—bringing the total number of green-powered branches to 26, including the Head Office. These actions resulted in a marked reduction in carbon emissions across operations. Water Conservation and Water Surplus Status Through the adoption of water- efficient technologies and community-centric projects, your Company has maintained its Water Positive/Surplus status, boosting water usage efficiency, while ramping up water replenishment initiatives in key areas to promote sustainability. Approach to Value Creation In FY25, LTF continued to push the boundaries of value creation by intertwining innovation with sustainability. With a keen focus on generating positive environmental and social results, your Company is adapting its business model to face the challenges of a transforming world and lead the charge in shaping it. By capitalising on emerging technologies, automation, and advanced data analytics, your Company enhances operational efficiency, while also prioritising customer experience, scalability, and resilience. Rooted in its vision and core values, your Company is committed to achieving long-term, sustainable growth that extends beyond profitability. Through purposeful investments in sustainability and an agile approach to market demands, your Company unlocks competitive advantages, fosters new business opportunities, attracts investments, and expands its market footprint. This forward-focused strategy positions your Company to thrive in an ever-changing landscape, contributing to both economic and societal prosperity. Considering the credit capacity of the rural customers, LTF has remained a responsible lender, ensuring they are not overburdened or overexposed to loans. In line with the commitment to financial prudence and stability, the EV value chain strategy was refined to improve partner quality. Integrated Annual Report 2024-25142
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Promoting Rural Livelihood and Development LTF’s focus in FY25 remained firmly on empowering rural communities through financial inclusion, with a deliberate focus on underserved regions and populations. The barriers faced by rural farmers, women, and MSMEs, particularly in low- income states, in accessing formal financial services are considerable. Your Company has made significant efforts to provide sustainable solutions that foster the economic strength and resilience of these communities, enabling them to pursue financial independence and long-term prosperity. Digitalisation for Environmental Impact The launch of the PLANET App, a customer service platform, significantly reduced the need for customer visits to branches and lowered paper consumption. By the end of FY25, this initiative resulted in a drop in carbon emissions and reduction in paper usage, further advancing your Company’s objective of reducing its environmental footprint through digital transformation. combating climate change and enhancing your Company’s environmental impact. In recognition of its commitment to sustainability, LTF has also received the ISO 14064- 2:2019 certification (FY24) for GHG Emissions Reduction, reaffirming its dedication to measurable and transparent climate action. Waste and Energy Management LTF successfully reduced both waste generation and energy consumption. Through focused energy and waste management initiatives, energy intensity was reduced by 5%, and waste recycling was increased by 2x, underscoring your Company’s commitment to operational efficiency and environmental accountability. As part of these efforts, a comprehensive waste assessment was conducted across the top 50 branches to estimate per capita waste generation, enabling data- driven waste management strategies. Additionally, energy audits of the top 10 branches have helped your Company identify areas for further optimisation, reinforcing existing measures such as LED lighting and energy-efficient appliances. Key initiatives and achievements in FY25 include: Targeting Low-Income States Sustainability Focused Loans LTF has consistently concentrated its efforts on directing credit to low-income states, ensuring that underserved rural populations gain access to essential financial services. In FY25, 50% of the rural loan portfolio was sourced from these states, a testament to LTF’s ongoing commitment to the country’s most vulnerable regions. In FY25, LTF raised ₹ 20,480 Cr sustainability focused/priority sector lending (PSL) to provide financing for rural women borrowers, micro- loans, and loans for farm equipment. This helped your Company provide much needed credit to underserved communities. Corporate Overview Statutory Reports Financial Statements L&T Finance 143
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Rural Livelihood Financing Two-Wheeler Financing for Economic Mobility Financial Inclusion for Customers LTF’s strategic focus allocated 40% of its loan book to financing rural livelihood projects, with a strong emphasis on supporting farmers and agricultural needs through offerings like Farm Equipment Finance. Through its Two-Wheeler Finance programme, your Company has furthered economic mobility across rural India. By offering financing for Two-Wheelers, including EV Two-Wheelers, your Company has enabled individuals to secure employment, especially in delivery services. This initiative fosters inclusive growth by equipping individuals with the tools to explore new job opportunities and improve their financial stability. In FY25, your Company made strides in extending financial access to customers, empowering individuals Employee-Focused Initiatives LTF has made employee well-being and development a constant priority, introducing a range of strategic initiatives to create a positive, engaging and growth-oriented workplace environment. LTF will continue undertaking initiatives for employee well-being. Great Place to Work (GPTW) Survey Recognising the role of employee satisfaction in fostering growth, LTF has leveraged the ‘Great Place to Work’ survey to assess engagement levels and introduce impactful changes. Various initiatives were taken up as part of the GPTW programme, driven by insights from the survey, to enhance employee experience. The survey’s findings have led to the launch of multiple initiatives Women’s Empowerment through Micro Loans LTF’s Rural Group Loans and Micro Loans have facilitated women’s entrepreneurship and financial independence in rural India. In FY25, the number of active women customers is at 61.06 lakh+. Additionally, 60% of rural group loans were granted to repeat women borrowers for scaling their small businesses. who were previously outside the reach of formal financial services to access credit for both personal and business needs. This effort has been a catalyst for financial inclusion, particularly in rural and underserved areas, enhancing their economic resilience. Project Cyclops played a pivotal role in this initiative, leveraging AI-driven credit underwriting to assess non-traditional data points such as digital footprints, banking transactions, and trust signals. By incorporating these insights, Cyclops enhanced credit decisioning accuracy. Integrated Annual Report 2024-25144
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Creating Social Impact LTF places community well-being at the core of its value creation agenda. By championing ethical and equitable initiatives, your Company empowers individuals, while promoting sustainable livelihoods. In FY25, it made substantial progress in supporting communities and ensuring its employees remain active participants in this journey. Key initiatives and achievements in FY25 include: Community Engagement Your Company positively impacted 16.93 lakh+ community members through its CSR initiatives, encompassing efforts to enhance education, healthcare, and local infrastructure. This continued focus on rural and underserved communities demonstrates LTF’s enduring commitment to fostering community development. Consumer Education and Awareness In FY25, LTF continued educating its customers on various topics through social media campaigns and blogs. Additional services like credit scores, wellness insurance plans, EMI calculator, and mandi price for rural customers, offer a convenient and efficient solution towards customer engagement. designed to elevate the work environment, including enhanced employee welfare programmes, broadened opportunities for career development, and a stronger, more positive workplace culture. Employee-Centric Policies LTF continuously updates its policies to ensure they are gender- neutral, inclusive, and supportive of diverse perspectives. This commitment extends to revising organisational standards and implementing practices that nurture a workplace where fairness and non- discrimination thrive. Targeted Development Programmes Your Company directs investments towards focused programmes that sharpen skills, nurture leadership qualities, and foster employee growth. These strategies ensure that employees succeed in their current roles, while being equipped for leadership opportunities and the sustained growth of the organisation. Corporate Overview Statutory Reports Financial Statements L&T Finance 145
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Leveraging Sustainable Finance In FY25, your Company advanced its sustainable finance agenda, ensuring that its funding activities resonate with global environmental and social goals. By financing projects with dual societal and ecological benefits, your Company continues to champion impactful change. Sustainable Finance Framework (SFF) In FY25, your Company continued to leverage its SFF, which supports financing for projects that are aligned with the UN SDGs. The framework is designed to provide structure and transparency, making it easier for your Company to fund impactful social and environmental projects. Sustainability- Focused Lending Your Company secured ₹20,480 Cr in sustainability- focused/priority sector lending loans in FY25, further solidifying its position as a leader in sustainable finance. Target for FY26 Moving forward, your Company is targeting sustainability focused loan / priority sector lending loans of ₹ 1,000 Cr every quarter. (Annual Target ₹ 4,000 Cr) for FY26. This goal reflects your Company’s dedication to aligning its financial operations with global sustainability imperatives. Integrated Annual Report 2024-25146
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Way Forward into a Technology Driven Retail Company As LTF progresses, the goal of becoming a digitally empowered lender i.e. technology driven retail Company, remains central to its vision. In FY25, your Company made substantial strides in establishing a strong foundation for this transformation, which will optimise operational efficiency, drive innovation, and foster long-term, sustainable growth. Focus on Long-Term Value Creation Focussing on generating value for its stakeholders—customers, employees, investors, and communities—your Company integrates financial performance with non-financial impact. This holistic strategy aligns every aspect of its business principles with sustainability and ethical growth. 5-Pillar of Execution The 5-Pillar of execution continue to serve as the strategic guide for your Company’s evolution into a technology driven retail NBFC. These pillars are—Enhancing Customer Acquisition, Sharpening Credit Underwriting, Implementing Futuristic Digital Architecture, Heightened Brand Visibility, and Capability Building. Board-Level Oversight Your Company’s Board exemplifies ESG leadership by enhancing ESG expertise, and leveraging key indicators to assess effectiveness. Regular field visits by the Board and CSR & ESG Committee members, help ensure that ESG strategies align with daily operations and core values while providing firsthand stakeholder insights, fostering a more responsive and responsible governance approach. A robust Board-level framework integrates environmental, social, and ethical considerations into strategy, reinforcing long-term resilience, integrity, and responsible business practices. Statutory Reports Financial Statements L&T Finance 147 Corporate Overview
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LTF understands that the foundation of a sustainable business lies in meaningful connections with stakeholders. By embedding stakeholder interests into its decision-making processes, your Company ensures its strategies remain flexible, inclusive, and well-prepared for the future. Your Company’s Lakshya 2026 roadmap highlights its dedication to creating long-term value, with a continued focus on customer-centricity and impactful operations. Recognising the diverse perspectives of its stakeholders, LTF nurtures relationships both within and beyond the organisation. Your Company’s framework is designed to address economic, environmental, social, and governance (ESG) considerations, while promoting transparency, responsiveness, and trust. With clear communication channels and a structured process, LTF ensures that stakeholder concerns are heard and effectively addressed. Integrating Strategic Assessments for Enhanced Stakeholder Engagement Over the course of the year, LTF has further strengthened its stakeholder engagement framework by integrating two key initiatives—the Double Materiality Assessment (DMA) and the Business Impact Study. The DMA offers a comprehensive assessment of both financial and non-financial risks, allowing LTF to fine-tune its strategies in response to shifting market trends and sustainability goals. By adopting this dual approach, the DMA has enabled LTF to stay ahead of emerging regulatory demands, evolving economic conditions, and ESG priorities. Simultaneously, the Business Impact Study maps the significant impact of LTF’s services, particularly how its focus on financial inclusion, responsible lending, and customer-centric strategies contribute to economic empowerment and community development. For further details about Double Materiality Assessment conducted by LTF, please refer to section on Materiality Assessment. Building Meaningful and SUSTAINABLE RELATIONSHIPS Stakeholder Engagement Integrated Annual Report 2024-25148
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Board’s Role in Stakeholder Engagement LTF’s stakeholder engagement strategy combines a variety of methods, from digital interactions to structured engagements and direct outreach, to foster meaningful relationships. The Board actively participates in these initiatives, ensuring that your Company remains aligned with the evolving needs and expectations of its stakeholders. Moreover, LTF has a dedicated Stakeholder’s Relationship & Customer Protection Committee for oversight. Direct Engagement and On-Ground Interactions The Chairman visited rural regions in Madurai in Tamil Nadu and Mysuru in Karnataka, to interact with customers and dealers, providing valuable insights into local financial behaviours and the shift towards digital payments in underserved regions. The Chairman also interacted with the CSR project beneficiaries to witness the impact created through the social development activities of your Company. Further Independent Directors also visited operational sites and as well CSR project locations, conducting a direct assessment of LTF’s initiatives and the effect on the communities they aim to uplift. Enhancing Stakeholder Experience To elevate its customer engagement strategy, LTF has introduced the Net Promoter Score (NPS), a systematic tool designed to assess customer satisfaction and service excellence. By adopting this initiative, LTF emphasises its commitment to constant evolution and its responsiveness to customer insights. Driving Industry Dialogue and Policy Advocacy LTF engages closely with regulatory bodies, industry associations, and key stakeholders to provide thoughtful perspectives and advocate for policies that support sustainable development. As a leading retail NBFC, your Company actively contributes to discussions on significant financial matters, including the Union Budget, Economic Survey, and Monetary Policy, ensuring that industry views are adequately represented. Through its ongoing involvement in regulatory consultations, LTF offers valuable feedback that shapes policy frameworks and keeps pace with emerging financial trends. Your Company is a member of influential industry organisations such as the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Finance Industry Development Council (FIDC), both of which play a pivotal role in advancing India’s financial services sector. LTF’s Managing Director & CEO holds key positions in industry bodies, including the FICCI Committee on Non-Banking Financial Companies (NBFCs), and has contributed to Government and Reserve Bank of India (RBI) Committees focused on transit payments, banking security, and retail payments. LTF’s Chief Sustainability Officer is a member of the CII WR Sub-Committee on Business Responsibility and has participated in ESG panels. LTF’s leadership, committed to driving financial inclusion through digital advancements, regularly participates in leading industry summits and roundtable events to share their expertise. Their insights have shaped important discussions on inclusive finance, technology, evolution, and enhancing digital access to financial services for underserved communities. Significantly, LTF’s Chief Economist has been invited to multiple forums to present expert perspectives on macroeconomic topics such as RBI Monetary Policy and India’s GDP Growth, further solidifying LTF’s role as a thought leader in the sector. Corporate Overview Statutory Reports Financial Statements L&T Finance 149
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Stakeholder Engagement Methods Expectations Engagement Frequency Grievance Mechanism Employees Employee engagement is driven by structured performance feedback, an annual rewards programme, and ongoing learning initiatives like leadership development programmes and DE&I awareness workshops. Your Company promotes transparency and open communication through town halls and periodic discussions with senior management. Prioritising employee well-being, your Company offers programmes like Stepathon 2.0, financial wellness seminars, and women’s health awareness sessions. Additionally, employees are encouraged to participate in recreational activities. A GPTW survey was conducted to gather employee feedback. Career growth and skill development Competitive compensation and benefits Work-life balance and well-being Recognition and engagement programmes Inclusive and diverse workplace Monthly Quarterly Half yearly Annually As and when needed The Code of Conduct (CoC) Committee, comprising senior leadership members, handles employee grievances. Concerns can be raised via emails (code@ltfs.com, whistleblower@ ltfs.com) or through the POSH Internal Committee (wecare@ltfs.com). ` Investors To foster transparent and proactive communication with investors, your Company ensures regular updates through quarterly financial results, investor call/meetings and Annual General Meetings. Key information is shared via stock exchanges, press releases, and your Company’s website. Moreover, credit rating reports, sustainability disclosures, integrated annual repots and active participation in investor conferences and Non-Deal Roadshows (NDRs) offer a deeper understanding of your Company’s financial standing and long-term operational strategy. As part of RAISE initiative a special Investor Digital Day conference was held. Business growth and financial stability Strong return on equity (ROE) Operational efficiency and risk management ESG compliance and sustainable business practices Monthly Quarterly Annual As and when needed Investor grievances are managed by the Secretarial Department and can be addressed through email (igrc@ltfs.com). Regulators To maintain strong regulatory adherence, the organisation prioritises prompt reporting, continuous communication, and active participation in policy consultations. This commitment is further demonstrated through periodic interactions during audits and inspections, as well as by playing active role in industry bodies to address regulatory challenges and business policy matters. Compliance with regulatory standards Ethical and responsible corporate conduct Transparency in financial and operational performance Fair treatment of employees and customers As prescribed under regulations and need based The Secretarial and Compliance Departments oversee regulatory concerns. Queries can be addressed via email (compliance@ltfs. com, igrc@ltfs. com). Stakeholder Engagement Framework Integrated Annual Report 2024-25150
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Stakeholder Engagement Methods Expectations Engagement Frequency Grievance Mechanism Customers Customer experience is enhanced through an omnichannel approach, ensuring seamless interactions via digital, hybrid, and human touchpoints. Customer support is provided through multiple grievance redressal channels, chatbots, WhatsApp services, and a self-help website. The PLANET App allows customers to manage existing and new loans efficiently. Additionally, cybersecurity risk awareness campaigns, Net Promoter Score (NPS) assessments, and face-to-face interactions help improve service quality. Quick turnaround times (TATs) Best-in-class service Transparent communication and fair advice Data privacy and security Digitised processes for seamless transactions Ongoing Monthly Quarterly Annually Scheduled interactions As and when needed Customer support is available via email (customercare@ ltfs.com), the official website (www. ltfinance.com), and customer care hotlines. An internal Ombudsman is in place for escalated concerns. Vendors Vendor relationships are governed by rigorous onboarding framework, periodic performance evaluations, and adherence to the Third-Party Code of Conduct. Your Company ensures ESG compliance within the supply chain through assessments and training programmes. Knowledge-sharing forums and technical collaborations enhance efficiency and foster long-term partnerships. Fair and ethical business contracts Transparent and long-term partnerships ESG-conscious procurement and sustainability alignment Technical collaboration and training support Quarterly Annually As and when needed Vendor-related concerns are addressed by the Code of Conduct (CoC) Committee. Grievances can be raised via email (code@ltfs.com). Communities Your Company drives social impact through community engagement programmes, surveys, and sustainability initiatives. Key focus areas include financial inclusion, disaster management, road safety awareness, and sustainable livelihood programmes such as agroforestry projects. Your Company actively collaborates with NGOs, policymakers, and industry bodies to implement and monitor these initiatives. Social upliftment and empowerment Financial inclusion and digital literacy Sustainability and environmental responsibility Collaboration with corporate and government entities Annually Ongoing Community-related concerns are managed by the CSR Department. Queries can be addressed via email (csr@ ltfs.com), while partner NGOs have dedicated communication channels. Corporate Overview Statutory Reports Financial Statements L&T Finance 151
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In an increasingly complex and ever-evolving financial, climatic and social ecosystem, conducting a comprehensive materiality assessment is essential for companies seeking to align with the broader goals of responsible growth. For LTF, this assessment is more than a regulatory obligation—it serves as a critical strategy to drive sustainable growth. As a frontrunner in the NBFC sector, your Company has set a new industry standard by being one of the first to conduct a Double Materiality Assessment. This approach allows your Company to assess its risks and opportunities from a broader perspective, integrating sustainability into its decision-making and reinforcing its dedication to responsible, value-driven growth. LTF has adopted a Double Materiality framework that evaluates sustainability from two integral viewpoints: Impact Materiality and Financial Materiality. This approach enables your Company to make well-rounded, responsible decisions, ensuring sustainable growth, and the creation of long-term value. Importance of Double Materiality Assessment Impact Materiality takes into account how LTF’s business activities affect the environment, society, and the economy—both positively and negatively. This includes impact of its products and operations, initiatives aimed at reducing carbon emissions, fostering financial inclusion, and providing support to local communities. Financial Materiality focusses on the potential risks posed by external sustainability factors like climate change, regulatory changes, and market transitions, which could impact your Company’s financial performance and overall enterprise value. By identifying and mitigating these risks, LTF opens doors for sustainable growth and innovation. Furthermore, by integrating these two dimensions, LTF ensures its operations are resilient, future ready, and completely aligned with stakeholder expectations. This integrated framework is designed to drive sustainable value, while minimising associated risks. 1 2 Impact Materiality Financial Materiality Measuring What Matters – BUSINESS, SOCIETY & SUSTAINABILITY Materiality Assessment Integrated Annual Report 2024-25152
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LTF’s Double Materiality Assessment was conducted using a structured and methodical approach, ensuring a comprehensive evaluation of both financial and ESG-related impacts. The process included the following steps: Double Materiality Assessment Process Internal Stakeholders Inclusive Stakeholder Participation To verify and refine these topics, a detailed survey was conducted with the Senior Management, followed by an extensive workshop that facilitated discussions and provided qualitative insights. Based on these findings, LTF developed a streamlined survey for additional key stakeholder groups, ensuring inclusive participation and valuable feedback. Your Company engaged a diverse set of internal and external stakeholders in the assessment process to gather their views regarding the probability and intensity of impact caused by each material topic. These included the following: Board members, CSR & ESG Committee, Senior Management, Heads, of Business Units, Middle Management, Junior Management, Frontline Managers, and Frontline Officers. Dealers Representatives from the Two- Wheeler, Farm Equipment, and SME businesses were engaged through comprehensive online sessions, executed in partnership with product and sales teams. Lenders Prominent institutional existing international and national lenders, participated in the survey to bring financial expertise into the mix. Value Chain & Other Partners Other value chain partners like suppliers, lenders and NGO partners also participated in the survey. Customers Urban customers from Housing Finance, Two-Wheeler, and SME businesses were surveyed to capture their feedback on their needs and experiences. Shareholders Parent Company, L&T’s leaders provided strategic insights into the long-term business impact of LTF. Identifying Material Topics LTF started by compiling a thorough list of potential material topics from global standards like GRI, DJSI, SASB, peer reports, and internal discussions with management and business teams. This ensured alignment with industry best practices and business priorities. Structured online/physical sessions were held to facilitate understanding of the material topics. Corporate Overview Statutory Reports Financial Statements L&T Finance 153
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Assessing Impact Materiality Stakeholder inputs were collected through surveys and consultations with Board, Senior leaders, employees, customers, suppliers, investors, and community members to gain insight into their expectations regarding ESG performance. Each topic was then assessed for its positive or negative impact on society, the environment, and stakeholders. Topics that closely aligned with LTF’s sustainability goals and stakeholder interests were prioritised. Stakeholder Prioritisation and Topic Normalisation To ensure balanced prioritisation, stakeholders were asked to rank the importance of each material topic. LTF used a weighted scoring methodology to balance stakeholder interests with business impact. Statistical techniques were used to normalise the results, minimising bias and ensuring accurate prioritisation. Developing the Materiality Matrix The assessed topics were plotted on a Materiality Matrix, classifying them into very high, high and medium priority, helping LTF focus on issues critical to both the business and stakeholders. Assessing Financial Materiality Parallelly, the financial impact of each topic on business performance, including potential risks, was Double Materiality Assessment Framework Financial Materiality How environmental and social issues affect a company's financial performance Impact Materiality How a company’s actions impact people and the environment Board Members (including CSR & ESG Committee) Middle Management CSR Partners C-suite Members Junior Management L&T Parent Senior Management Field-level Employees Lenders Business Heads DSAs/Dealers Customers - (Urban) Stakeholder Interactions (390+ Man hrs.) Materiality Matrix STAKEHOLDERS INVOLVED No. of stakeholder responses: 390+ INPUT OUTPUT assessed and opportunities that could affect cash flows, operational resilience, and growth prospects. The evaluation was structured around the six capitals — Financial, Manufactured, Intellectual, Human, Social & Relationship, and Natural — to identify resource dependencies and business outcomes. Material topics with significant financial implications were prioritised. Integrated Annual Report 2024-25154
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Materiality Matrix Double Materiality Risk and Crisis Management Corporate Governance & Ethics Privacy and Data Security Innovation and Digitisation Return on Equity/ Return to Shareholders Community Development Climate and Decarbonisation Strategy Geopolitical Risks Diversity, Equity and Inclusion Operational Eco-Efficiency Sustainable Value Chain Customer Experience & Satisfaction Human Capital Development Human Rights Protection Financial Inclusion Legal and Regulatory Compliance Sustainable & Responsible Finance Financial Materiality Environmental Topics Low intensity of the topic (positive & negative) on LTF Medium intensity of the topic (positive & negative) on LTF High intensity of the topic (positive & negative) on LTF Social Topics Governance Topics Impact Materiality Integration into Strategy and Reporting The outcomes were integrated into LTF’s sustainability strategy, and ESG reporting. High-priority topics were embedded into business operations and disclosures, ensuring transparency and proactive risk management. As a standard process, a periodic review mechanism has been established to regularly update material topics in line with evolving stakeholder expectations and business trends. Medium High High Corporate Overview Statutory Reports Financial Statements L&T Finance 155
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Priority Material Topic Category of the Topic 1 Legal and Regulatory Compliance 2 Corporate Governance and Ethics 3 Risk and Crisis Management 4 Innovation and Digitisation 5 Privacy and Data Security 6 Return on Equity/Return to Shareholders 7 Customer Experience and Satisfaction 8 Climate and Decarbonisation Strategy 9 Financial Inclusion Material Topics LTF’s material topics have evolved through a structured process of review and refinement, aligning with the changing business landscape, regulatory shifts, and stakeholder expectations. A fresh double materiality assessment has helped your Company to refine its material topics in FY25. This assessment incorporated insights from LTF’s risk assessments, business objectives, internal analysis, and stakeholder analysis, leading to a strategic merging and reprioritisation of certain topics. Environment Social Governance Integrated Annual Report 2024-25156
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Priority Material Topic Category of the Topic 10 Sustainable and Responsible Finance 11 Human Capital Development 12 Sustainable Value Chain 13 Diversity, Equity and Inclusion 14 Geopolitical Risks 15 Operational Eco-Efficiency 16 Human Rights Protection 17 Community Development Environment Social Governance Corporate Overview Statutory Reports Financial Statements L&T Finance 157
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Legal and Regulatory Compliance Adherence to applicable laws, regulations, and industry standards Supports operational integrity, mitigates legal risks, and fosters trust with stakeholders by demonstrating a commitment to lawful and ethical conduct Risk Legal and regulatory compliance is a dynamic challenge due to changes in regulations, especially in financial markets. Failing to stay updated can lead to fines, lawsuits, operational disruptions, loss of licenses, and reputational damage, which can erode market share and financial stability. Opportunity Compliance provides strategic advantages, including better financing terms, stronger business partnerships, and access to ethical investors. It also opens opportunities for green and socially responsible investment funds. Proactively adhering to regulations can improve efficiency, reduce penalty risks, and enhance long-term organisational value. Risk Establishing a dedicated team responsible for monitoring legal and regulatory changes Conducting regular training for employees on compliance updates and regulations Conduct marketing training for relevant teams to prevent mis-selling and false claims Developing relationships with legal advisors or experts for jurisdiction- specific guidance Creating a strong ethical organisational culture with a focus on transparency and compliance Regularly carrying out risk assessments and audits to identify areas of potential exposure to compliance related risks Opportunity Leveraging certifications from regulatory bodies to enhance credibility Aligning operations with evolving legal standards to attract ethically driven investors Capitalising on compliance with ESG standards to access socially responsible funds Negative implications Financial penalties, legal costs, and decreased revenue due to reputation loss. Higher borrowing costs and reduced access to favourable financing terms Positive implications New revenue streams, particularly through ESG investments and green financing Reduced legal risks, lowering long-term costs Enhanced investor and stakeholder confidence Improved access to stable capital and potentially lowering the cost of financing Access to government subsidies and concessions Amount of fines and penalties paid Number of notices and warning letters received from regulatory bodies Internal, External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25158
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Legal and Regulatory Compliance Adherence to applicable laws, regulations, and industry standards Supports operational integrity, mitigates legal risks, and fosters trust with stakeholders by demonstrating a commitment to lawful and ethical conduct Risk Legal and regulatory compliance is a dynamic challenge due to changes in regulations, especially in financial markets. Failing to stay updated can lead to fines, lawsuits, operational disruptions, loss of licenses, and reputational damage, which can erode market share and financial stability. Opportunity Compliance provides strategic advantages, including better financing terms, stronger business partnerships, and access to ethical investors. It also opens opportunities for green and socially responsible investment funds. Proactively adhering to regulations can improve efficiency, reduce penalty risks, and enhance long-term organisational value. Risk Establishing a dedicated team responsible for monitoring legal and regulatory changes Conducting regular training for employees on compliance updates and regulations Conduct marketing training for relevant teams to prevent mis-selling and false claims Developing relationships with legal advisors or experts for jurisdiction- specific guidance Creating a strong ethical organisational culture with a focus on transparency and compliance Regularly carrying out risk assessments and audits to identify areas of potential exposure to compliance related risks Opportunity Leveraging certifications from regulatory bodies to enhance credibility Aligning operations with evolving legal standards to attract ethically driven investors Capitalising on compliance with ESG standards to access socially responsible funds Negative implications Financial penalties, legal costs, and decreased revenue due to reputation loss. Higher borrowing costs and reduced access to favourable financing terms Positive implications New revenue streams, particularly through ESG investments and green financing Reduced legal risks, lowering long-term costs Enhanced investor and stakeholder confidence Improved access to stable capital and potentially lowering the cost of financing Access to government subsidies and concessions Amount of fines and penalties paid Number of notices and warning letters received from regulatory bodies Internal, External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 159
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Corporate Governance and Ethics Establishing and maintaining robust frameworks for decision- making, transparency, and accountability Preventing unethical behaviour, such as corruption and discrimination, insider trading, bribery, and upholding corporate social responsibility and fiduciary duties Risk Failure to adhere to ethical standards and regulatory compliance exposes LTF to significant legal repercussions, including fines, penalties, reputational harm, operational disruption, and a significant loss of trust and market value. Such violations could trigger a decline in shareholder confidence, intensify government scrutiny, and result in sanctions or penalties, thereby undermining the long-term viability of the business. Opportunity A sound corporate governance framework instils greater confidence and reliability among stakeholders, consequently boosting ESG rankings and strengthening brand integrity. Risk Establishing processes and controls to strengthen compliance with the Code of Conduct and applicable policies, followed by independent audits Raising awareness and conducting mandatory regular training on ethical business practices for internal stakeholders Implementing effective whistleblower and grievance redressal mechanisms Deploying a Board and Committee structure aligned with Company’s long-term stakeholder interests Opportunity Reinforcing ethical standards through clear codes of conduct, ethics committees, and regular governance and ethics training Establishing a culture of following the highest standards of governance within your Company Negative implications Inability to raise capital, and fall in the share price due to diminished investor confidence stemming from weak corporate governance or ethical lapses Legal fines and penalties arising from non- compliance with regulations, leading to significant financial outflows Potential dissolution of business or suspension of the license to operate due to serious governance failures or ethical violations, halting business operations and threatening long-term viability Positive implications Improved access to capital through enhanced corporate governance practices and stronger ethical standards, attracting long-term and responsible investors, and help in effective engagement with regulators Stronger customer base driven by increased trust and loyalty as a result of transparency and high ethical standards Number of cases related to corruption, insider trading, or whistleblowing % employee coverage in training on various matters related to ethics Number of independent members on the Board KRA for Senior Management linked to corporate governance matters Appropriate number and structure of committees Robust controls and processes Internal, External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25160
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Corporate Governance and Ethics Establishing and maintaining robust frameworks for decision- making, transparency, and accountability Preventing unethical behaviour, such as corruption and discrimination, insider trading, bribery, and upholding corporate social responsibility and fiduciary duties Risk Failure to adhere to ethical standards and regulatory compliance exposes LTF to significant legal repercussions, including fines, penalties, reputational harm, operational disruption, and a significant loss of trust and market value. Such violations could trigger a decline in shareholder confidence, intensify government scrutiny, and result in sanctions or penalties, thereby undermining the long-term viability of the business. Opportunity A sound corporate governance framework instils greater confidence and reliability among stakeholders, consequently boosting ESG rankings and strengthening brand integrity. Risk Establishing processes and controls to strengthen compliance with the Code of Conduct and applicable policies, followed by independent audits Raising awareness and conducting mandatory regular training on ethical business practices for internal stakeholders Implementing effective whistleblower and grievance redressal mechanisms Deploying a Board and Committee structure aligned with Company’s long-term stakeholder interests Opportunity Reinforcing ethical standards through clear codes of conduct, ethics committees, and regular governance and ethics training Establishing a culture of following the highest standards of governance within your Company Negative implications Inability to raise capital, and fall in the share price due to diminished investor confidence stemming from weak corporate governance or ethical lapses Legal fines and penalties arising from non- compliance with regulations, leading to significant financial outflows Potential dissolution of business or suspension of the license to operate due to serious governance failures or ethical violations, halting business operations and threatening long-term viability Positive implications Improved access to capital through enhanced corporate governance practices and stronger ethical standards, attracting long-term and responsible investors, and help in effective engagement with regulators Stronger customer base driven by increased trust and loyalty as a result of transparency and high ethical standards Number of cases related to corruption, insider trading, or whistleblowing % employee coverage in training on various matters related to ethics Number of independent members on the Board KRA for Senior Management linked to corporate governance matters Appropriate number and structure of committees Robust controls and processes Internal, External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 161
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Risk and Crisis Management Identifying, assessing, and addressing threats and opportunities from both internal and external factors like Data Analytics for Early Warning, Climate risk identification & mitigation, Risk Control Measures for Fraud and Money Laundering, Reputational risks and Systemic Risks, as well as developing strategies to effectively respond to and mitigate crises Risk Risk and Crisis Management is a critical factor as inadequate preparedness for market volatility, regulatory changes, geopolitical risks, or financial disruptions can lead to operational instability, financial losses, and diminished stakeholder confidence. Risk Strengthening the risk assessment frameworks with predictive analytics Diversifying asset allocation to mitigate sector-specific downturns Implementing stress testing and scenario analysis to anticipate potential disruptions Establishing structural independence of the risk function to ensure unbiased assessment and mitigation Promoting a company-wide risk assessment culture by embedding risk awareness across all levels Conducting risk-specific education and training for the Board of Directors and employees to keep them updated on best practices and reporting mechanisms Leveraging advanced analytics and AI-driven risk assessment to identify potential risks proactively Collaborating with regulatory bodies and industry peers to align with global best practices Negative implications Potential financial losses Poor quality of portfolio Weakened resilience Impacts decision-making and operational stability Increased cost of capital Reputational damage Training hours on risk management Ability to mitigate risk through ERM framework and employee and Board participation in risk training Internal Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25162
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Risk and Crisis Management Identifying, assessing, and addressing threats and opportunities from both internal and external factors like Data Analytics for Early Warning, Climate risk identification & mitigation, Risk Control Measures for Fraud and Money Laundering, Reputational risks and Systemic Risks, as well as developing strategies to effectively respond to and mitigate crises Risk Risk and Crisis Management is a critical factor as inadequate preparedness for market volatility, regulatory changes, geopolitical risks, or financial disruptions can lead to operational instability, financial losses, and diminished stakeholder confidence. Risk Strengthening the risk assessment frameworks with predictive analytics Diversifying asset allocation to mitigate sector-specific downturns Implementing stress testing and scenario analysis to anticipate potential disruptions Establishing structural independence of the risk function to ensure unbiased assessment and mitigation Promoting a company-wide risk assessment culture by embedding risk awareness across all levels Conducting risk-specific education and training for the Board of Directors and employees to keep them updated on best practices and reporting mechanisms Leveraging advanced analytics and AI-driven risk assessment to identify potential risks proactively Collaborating with regulatory bodies and industry peers to align with global best practices Negative implications Potential financial losses Poor quality of portfolio Weakened resilience Impacts decision-making and operational stability Increased cost of capital Reputational damage Training hours on risk management Ability to mitigate risk through ERM framework and employee and Board participation in risk training Internal Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 163
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Innovation and Digitisation Developing cutting-edge processes and leveraging advanced technologies to drive business growth Enhancing financial literacy for customers using digital modes Building a futuristic digital architecture to optimise user experiences by utilising in-house engineering and tools like Project Cyclops for sharper credit underwriting Focussing on all kinds of disruptive innovations from a product and operations perspective Building innovations around product mix The strategic adoption of innovation and digitisation provides a compelling opportunity to optimise the way your Company delivers services, increasing both accessibility and cost- efficiency. As consumer expectations tilt towards more streamlined, automated, and transparent experiences, embracing these innovations will likely fortify your Company’s competitive standing. Investing continuously in digital tools, platforms, and infrastructure Leveraging AI, machine learning, and data analytics to improve decision- making and customer engagement Regularly training and upskilling employees to adapt to technological changes Establishing partnerships with tech innovators Prioritising cybersecurity measures to safeguard against digital risks Positive implications Long-term cost savings and increased operational efficiency Scalable solutions that enhance revenue generation Improved customer satisfaction and retention, leading to stronger market share Finclusion of new customer segments, including new-to-credit customers Ability to tap into newer markets and capture the market share with first mover advantage Enhanced cybersecurity with innovative measures Ability to stay ahead of the competitors % increase in digital adoption by customers Reduction in operational costs due to digitalisation Time reduction in loan approval and disbursement processes Customer satisfaction and Net Promoter Score (NPS) related to digital experiences Percentage growth in digital financing offerings and portfolio. New-to-credit customers Internal, External Privacy and Data Security Management of risks related to the collection, retention, and use of sensitive, confidential, and/ or proprietary customer or user data Protection against incidents such as data breaches in which Personally Identifiable Information (PII) and other user or customer data may be exposed The risk of data breaches, cyberattacks, and violations of data protection laws poses a significant threat, particularly in light of the growing complexity of digital infrastructure. Inadequate safeguards for sensitive data can erode consumer confidence, leading to legal consequences, and result in hefty financial penalties. Additionally, reputational harm from such incidents could undermine the long-term viability of the business. Implementing strong data security frameworks (encryption, access controls, security audits) Training employees on cybersecurity best practices and ensuring up-to- date compliance with evolving laws Partnering with cybersecurity firms for proactive threat detection and response Training customers on data privacy Ensuring protection of information assets through ISO 27001 certification Negative implications Potential fines, legal costs, and loss of business from data breaches or non- compliance Decline in customer base and investor confidence, impacting long-term revenue Number of data breaches or incidents Compliance percentage with data protection regulations Customer satisfaction related to data security Average time to detect and address security breaches Investment in cybersecurity as a percentage of revenue Number of employees trained in data protection best practices Internal, External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25164
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Innovation and Digitisation Developing cutting-edge processes and leveraging advanced technologies to drive business growth Enhancing financial literacy for customers using digital modes Building a futuristic digital architecture to optimise user experiences by utilising in-house engineering and tools like Project Cyclops for sharper credit underwriting Focussing on all kinds of disruptive innovations from a product and operations perspective Building innovations around product mix The strategic adoption of innovation and digitisation provides a compelling opportunity to optimise the way your Company delivers services, increasing both accessibility and cost- efficiency. As consumer expectations tilt towards more streamlined, automated, and transparent experiences, embracing these innovations will likely fortify your Company’s competitive standing. Investing continuously in digital tools, platforms, and infrastructure Leveraging AI, machine learning, and data analytics to improve decision- making and customer engagement Regularly training and upskilling employees to adapt to technological changes Establishing partnerships with tech innovators Prioritising cybersecurity measures to safeguard against digital risks Positive implications Long-term cost savings and increased operational efficiency Scalable solutions that enhance revenue generation Improved customer satisfaction and retention, leading to stronger market share Finclusion of new customer segments, including new-to-credit customers Ability to tap into newer markets and capture the market share with first mover advantage Enhanced cybersecurity with innovative measures Ability to stay ahead of the competitors % increase in digital adoption by customers Reduction in operational costs due to digitalisation Time reduction in loan approval and disbursement processes Customer satisfaction and Net Promoter Score (NPS) related to digital experiences Percentage growth in digital financing offerings and portfolio. New-to-credit customers Internal, External Privacy and Data Security Management of risks related to the collection, retention, and use of sensitive, confidential, and/ or proprietary customer or user data Protection against incidents such as data breaches in which Personally Identifiable Information (PII) and other user or customer data may be exposed The risk of data breaches, cyberattacks, and violations of data protection laws poses a significant threat, particularly in light of the growing complexity of digital infrastructure. Inadequate safeguards for sensitive data can erode consumer confidence, leading to legal consequences, and result in hefty financial penalties. Additionally, reputational harm from such incidents could undermine the long-term viability of the business. Implementing strong data security frameworks (encryption, access controls, security audits) Training employees on cybersecurity best practices and ensuring up-to- date compliance with evolving laws Partnering with cybersecurity firms for proactive threat detection and response Training customers on data privacy Ensuring protection of information assets through ISO 27001 certification Negative implications Potential fines, legal costs, and loss of business from data breaches or non- compliance Decline in customer base and investor confidence, impacting long-term revenue Number of data breaches or incidents Compliance percentage with data protection regulations Customer satisfaction related to data security Average time to detect and address security breaches Investment in cybersecurity as a percentage of revenue Number of employees trained in data protection best practices Internal, External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 165
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Return on Equity/Return to Shareholders Reflects how effectively a Company utilises its equity to generate profits and create value for its investors A concentrated effort to elevate ROE illustrates your Company’s aptitude in effectively utilising capital to yield robust returns for its investors. As a critical evaluative metric, ROE is indispensable to stakeholders when assessing the long-term financial soundness and operational efficiency of your Company, thus offering an exceptional prospect for both growth and value accretion. Enhancing operational efficiency and improving productivity Focussing on increasing profitability through cost reduction and optimising processes Optimising the capital structure to ensure effective allocation of equity Making strategic investments in high- margin businesses to drive profitability Efficiently utilising retained earnings for reinvestment Prioritising effective capital allocation to generate higher returns Positive implications Increased profitability leading to greater shareholder returns Boosted investor confidence, potentially attracting new investments Increased access to capital Potential positive impact on stock price due to higher ROE Lower cost of capital driven by improved financial performance Return on Equity (ROE) Internal Customer Experience and Satisfaction Strategies and practices used to manage customer interactions, enhance satisfaction, and build loyalty Includes customer acquisition, cross-selling, launching complementary product offerings, and promoting financial literacy to ensure a positive, seamless experience across all touchpoints The success of any business hinges on customer experience and satisfaction. As customer expectations rise, digital touchpoints evolve swiftly, and the risk of dissatisfaction increases when services fail to meet needs. Inadequate delivery of personalised, seamless experiences may lead to customer churn, adverse reviews, or a decline in market share to competing firms. Implementing effective feedback loops for continuous improvement Investing in technology to provide a more intuitive and user-friendly experience Providing regular training to customer-facing teams for better communication and problem-solving Adopting personalised financial solutions tailored to individual customer needs Optimising digital tools and platforms to improve efficiency and response times Understanding customer expectations and needs Providing transparent information and fair advice to customers in relation to the product Negative implications Reduced customer retention Increased risk of financial loss Lower revenue Higher customer acquisition costs Increased risks of legal implication Reputational damage and loss of stakeholder confidence Customer satisfaction scores (e.g., Net Promoter Score) Retention rates Resolution time for customer complaints/ issues Feedback response rates Internal, External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25166
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Return on Equity/Return to Shareholders Reflects how effectively a Company utilises its equity to generate profits and create value for its investors A concentrated effort to elevate ROE illustrates your Company’s aptitude in effectively utilising capital to yield robust returns for its investors. As a critical evaluative metric, ROE is indispensable to stakeholders when assessing the long-term financial soundness and operational efficiency of your Company, thus offering an exceptional prospect for both growth and value accretion. Enhancing operational efficiency and improving productivity Focussing on increasing profitability through cost reduction and optimising processes Optimising the capital structure to ensure effective allocation of equity Making strategic investments in high- margin businesses to drive profitability Efficiently utilising retained earnings for reinvestment Prioritising effective capital allocation to generate higher returns Positive implications Increased profitability leading to greater shareholder returns Boosted investor confidence, potentially attracting new investments Increased access to capital Potential positive impact on stock price due to higher ROE Lower cost of capital driven by improved financial performance Return on Equity (ROE) Internal Customer Experience and Satisfaction Strategies and practices used to manage customer interactions, enhance satisfaction, and build loyalty Includes customer acquisition, cross-selling, launching complementary product offerings, and promoting financial literacy to ensure a positive, seamless experience across all touchpoints The success of any business hinges on customer experience and satisfaction. As customer expectations rise, digital touchpoints evolve swiftly, and the risk of dissatisfaction increases when services fail to meet needs. Inadequate delivery of personalised, seamless experiences may lead to customer churn, adverse reviews, or a decline in market share to competing firms. Implementing effective feedback loops for continuous improvement Investing in technology to provide a more intuitive and user-friendly experience Providing regular training to customer-facing teams for better communication and problem-solving Adopting personalised financial solutions tailored to individual customer needs Optimising digital tools and platforms to improve efficiency and response times Understanding customer expectations and needs Providing transparent information and fair advice to customers in relation to the product Negative implications Reduced customer retention Increased risk of financial loss Lower revenue Higher customer acquisition costs Increased risks of legal implication Reputational damage and loss of stakeholder confidence Customer satisfaction scores (e.g., Net Promoter Score) Retention rates Resolution time for customer complaints/ issues Feedback response rates Internal, External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 167
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Climate and Decarbonisation Strategy Company’s efforts to assess and address the risks and opportunities related to climate change and to reduce its carbon footprint across its operations In the financial services sector, it also refers to managing investment portfolios and financed emissions to minimise environmental impact Risk Inaction on climate change can lead to regulatory penalties, higher costs, and reputational damage. Non-compliance with emissions standards may impact LTF’s access to long-term financing and partnerships. Physical infrastructure is also at risk due to climate events, alongside potential portfolio stress from higher delinquencies. At the same time, reduced credit loss may occur if customers adapt effectively, underscoring the need for accurate climate-linked risk assessment. Opportunity Proactive decarbonisation enables innovation, efficiency, and market differentiation. It opens avenues for climate- focused products and financing solutions, better credit assessment, and reduced operational costs. Aligning with Net Zero goals also enhances investor appeal and long- term sustainability. Risk Assessing climate risk within portfolios using risk heat maps and stress testing to identify exposures Developing mitigation strategies based on the assessed climate risks in portfolios Installing energy-efficient infrastructure, reducing resource wastage, and procuring renewable energy Embedding climate risk considerations within the Enterprise Risk Management (ERM) framework Establishing a climate strategy to minimise the negative impact of operations Advocating for relevant policies and staying updated on environmental regulations Regularly reviewing and adjusting climate strategies to stay ahead of emerging risks Partnering with value chain stakeholders to identify and manage climate-related risks Implementing carbon offset programmes to reduce environmental impact Improving operational efficiency through adoption of green technologies Opportunity Financing renewable energy projects and energy-efficient technologies through retail finance Developing a sustainability roadmap with clear decarbonisation timelines Building partnerships with industry leaders and participating in sustainability initiatives Supporting clients with climate- resilient financing and climate-aligned lending models Negative implications Increased compliance costs, environmental penalties, and rising energy and raw material expenses due to tightening regulations related to emissions High upfront capital expenditures required for transitioning to low-carbon operations and adopting sustainable technologies Reputational damage from poor ESG performance, potentially resulting in revenue loss, customer churn, or market backlash Financial risk from reduced investor confidence, potential divestment, or failure to meet sustainability targets Positive implications Stronger brand equity and competitive advantage, appealing to ESG-conscious investors and customers Improved resilience to regulatory shifts and carbon pricing mechanisms Enhanced ability to mitigate climate- related risks across the portfolio and participate in the growing sustainable finance market Lower Non-Performing Assets (NPAs) due to stronger credit risk assessments tied to climate resilience Cost savings and efficiency gains through adoption of energy-efficient systems and renewable energy. Access to green financing, tax incentives, and sustainability-linked subsidies Emission reduction Energy savings Scope 3 and financed emissions reduction Internal, External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25168
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Climate and Decarbonisation Strategy Company’s efforts to assess and address the risks and opportunities related to climate change and to reduce its carbon footprint across its operations In the financial services sector, it also refers to managing investment portfolios and financed emissions to minimise environmental impact Risk Inaction on climate change can lead to regulatory penalties, higher costs, and reputational damage. Non-compliance with emissions standards may impact LTF’s access to long-term financing and partnerships. Physical infrastructure is also at risk due to climate events, alongside potential portfolio stress from higher delinquencies. At the same time, reduced credit loss may occur if customers adapt effectively, underscoring the need for accurate climate-linked risk assessment. Opportunity Proactive decarbonisation enables innovation, efficiency, and market differentiation. It opens avenues for climate- focused products and financing solutions, better credit assessment, and reduced operational costs. Aligning with Net Zero goals also enhances investor appeal and long- term sustainability. Risk Assessing climate risk within portfolios using risk heat maps and stress testing to identify exposures Developing mitigation strategies based on the assessed climate risks in portfolios Installing energy-efficient infrastructure, reducing resource wastage, and procuring renewable energy Embedding climate risk considerations within the Enterprise Risk Management (ERM) framework Establishing a climate strategy to minimise the negative impact of operations Advocating for relevant policies and staying updated on environmental regulations Regularly reviewing and adjusting climate strategies to stay ahead of emerging risks Partnering with value chain stakeholders to identify and manage climate-related risks Implementing carbon offset programmes to reduce environmental impact Improving operational efficiency through adoption of green technologies Opportunity Financing renewable energy projects and energy-efficient technologies through retail finance Developing a sustainability roadmap with clear decarbonisation timelines Building partnerships with industry leaders and participating in sustainability initiatives Supporting clients with climate- resilient financing and climate-aligned lending models Negative implications Increased compliance costs, environmental penalties, and rising energy and raw material expenses due to tightening regulations related to emissions High upfront capital expenditures required for transitioning to low-carbon operations and adopting sustainable technologies Reputational damage from poor ESG performance, potentially resulting in revenue loss, customer churn, or market backlash Financial risk from reduced investor confidence, potential divestment, or failure to meet sustainability targets Positive implications Stronger brand equity and competitive advantage, appealing to ESG-conscious investors and customers Improved resilience to regulatory shifts and carbon pricing mechanisms Enhanced ability to mitigate climate- related risks across the portfolio and participate in the growing sustainable finance market Lower Non-Performing Assets (NPAs) due to stronger credit risk assessments tied to climate resilience Cost savings and efficiency gains through adoption of energy-efficient systems and renewable energy. Access to green financing, tax incentives, and sustainability-linked subsidies Emission reduction Energy savings Scope 3 and financed emissions reduction Internal, External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 169
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Financial Inclusion Creates availability and equality of opportunities for underserved individuals to access financial services Defines the process by which individuals and businesses can access appropriate, affordable, and timely financial products and services Includes offerings such as affordable loans and credit facilities for women entrepreneurs, among others Expanding access to financial products in underserved markets such as rural areas, small businesses, and women entrepreneurs can help grow the customer base and strengthen market position. It supports economic development, enables last-mile access, and appeals to socially conscious investors. Developing tailored financial products for underserved demographics, focussing on affordability and accessibility Collaborating with technology companies and digital platforms to provide seamless digital financial services Investing in financial literacy programmes to empower customers and individuals to make informed financial decisions Partnering with government or NGOs to promote financial inclusion initiatives Positive implications Expansion into underpenetrated markets can increase the customer base, leading to higher revenue potential Enhanced market share and competitive advantage by being a leader in promoting financial inclusion % of customers from low-income states Number of rural women receiving loans % of New-to-Credit customers Number of community members trained in digital financial literacy by Digital Sakhis Internal, External Sustainable and Responsible Finance Includes responsibly assessing and managing the ESG risks and opportunities associated with credit and lending decisions, promoting businesses that contribute to sustainable development while minimising negative environmental or social impacts Represents an opportunity to tap into emerging markets, attract socially and environmentally conscious investors, and enhance long-term profitability through responsible growth and new financial products and instruments In light of the increasing global emphasis on ESG compliance, sustainable investments, and responsible financial strategies, LTF is committed to leveraging these dynamics. Through the introduction of innovative financial offerings, your Company seeks to attract investors with an ESG orientation, while simultaneously securing affordable, long-term capital, thereby enhancing its competitive positioning in the marketplace. Embedding ESG considerations into financing decisions to support sustainable projects, while managing ESG risks Developing green and sustainable financial products to meet rising demand and open new revenue streams Engaging stakeholders to align financial strategies with evolving sustainability expectations Offering new financial instruments that attract low-cost, patient capital and foster long-term relationships with investors Strengthening ESG risk assessment frameworks to evaluate financial exposures related to sustainability Positive implications Access to new sustainable finance markets and green funding opportunities Development of innovative financial products and revenue streams Competitive advantage through alignment with global ESG benchmarks and securing patient capital Percentage of ESG- linked financing in total portfolio Growth in sustainable finance product offerings and new instruments Sustainability-focused loans Number of EVs financed External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25170
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Financial Inclusion Creates availability and equality of opportunities for underserved individuals to access financial services Defines the process by which individuals and businesses can access appropriate, affordable, and timely financial products and services Includes offerings such as affordable loans and credit facilities for women entrepreneurs, among others Expanding access to financial products in underserved markets such as rural areas, small businesses, and women entrepreneurs can help grow the customer base and strengthen market position. It supports economic development, enables last-mile access, and appeals to socially conscious investors. Developing tailored financial products for underserved demographics, focussing on affordability and accessibility Collaborating with technology companies and digital platforms to provide seamless digital financial services Investing in financial literacy programmes to empower customers and individuals to make informed financial decisions Partnering with government or NGOs to promote financial inclusion initiatives Positive implications Expansion into underpenetrated markets can increase the customer base, leading to higher revenue potential Enhanced market share and competitive advantage by being a leader in promoting financial inclusion % of customers from low-income states Number of rural women receiving loans % of New-to-Credit customers Number of community members trained in digital financial literacy by Digital Sakhis Internal, External Sustainable and Responsible Finance Includes responsibly assessing and managing the ESG risks and opportunities associated with credit and lending decisions, promoting businesses that contribute to sustainable development while minimising negative environmental or social impacts Represents an opportunity to tap into emerging markets, attract socially and environmentally conscious investors, and enhance long-term profitability through responsible growth and new financial products and instruments In light of the increasing global emphasis on ESG compliance, sustainable investments, and responsible financial strategies, LTF is committed to leveraging these dynamics. Through the introduction of innovative financial offerings, your Company seeks to attract investors with an ESG orientation, while simultaneously securing affordable, long-term capital, thereby enhancing its competitive positioning in the marketplace. Embedding ESG considerations into financing decisions to support sustainable projects, while managing ESG risks Developing green and sustainable financial products to meet rising demand and open new revenue streams Engaging stakeholders to align financial strategies with evolving sustainability expectations Offering new financial instruments that attract low-cost, patient capital and foster long-term relationships with investors Strengthening ESG risk assessment frameworks to evaluate financial exposures related to sustainability Positive implications Access to new sustainable finance markets and green funding opportunities Development of innovative financial products and revenue streams Competitive advantage through alignment with global ESG benchmarks and securing patient capital Percentage of ESG- linked financing in total portfolio Growth in sustainable finance product offerings and new instruments Sustainability-focused loans Number of EVs financed External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 171
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Human Capital Development Enhance employees’ skills, knowledge, and abilities to maximise their contribution to the organisation Focus on the acquisition, training, management, and retention of employees Invest in training, professional growth, well-being initiatives, and talent optimisation in AI/ ML, credit and risk, and tech & engineering Boost productivity, foster innovation, and drive long-term value for both employees and your Company Investing in employee development fosters a more adaptable and resilient workforce, essential for driving productivity, innovation, and overall customer satisfaction. As industries evolve and technology transforms the business landscape, the demand for a skilled, future-ready workforce becomes critical to sustaining long-term growth and staying competitive. This emphasis on human capital ensures the organisation remains agile, prepared to face emerging challenges, and capable of seizing new opportunities. Fostering a culture of continuous learning and innovation by introducing tailored training programmes and leadership academies Partnering with industry experts, educational institutions, and skill- development agencies to design specialised programmes Encouraging internal mobility and cross-functional learning to increase knowledge sharing and build a versatile workforce Implementing performance management systems that align personal growth with organisational goals, ensuring a clear path for career progression Positive implications Improved employee performance, reduced turnover, and higher engagement Better financial results and ROI through strategic development Skilled employees foster innovation and enhance operational efficiency Development of a well-trained workforce positively impacts long-term profitability Employee retention rate and turnover ratio Employee satisfaction and engagement scores Number of employees completing development programmes and leadership training Improvement in individual and team performance metrics post-training Internal promotion rate and career progression metrics Cost-to-benefit ratio of training and development initiatives Internal Sustainable Value Chain Ensures ESG compliance across all operations, including vendor engagement, business partners (DSAs and agents), ethical client interactions, and financial reporting, among others Embeds ESG factors throughout these processes to enhance efficiency, manage risks, and contribute to societal and environmental goals With an increasing global emphasis on ESG factors, integrating sustainability across the value chain is becoming essential for future-ready businesses. Responsible vendor relationships, ethical client engagement, and transparent financial reporting are key to building stakeholder trust, addressing growing consumer expectations, investor preferences, and regulatory requirements— turning compliance into a competitive advantage. Strengthen partnerships with suppliers who follow sustainable practices Implement rigorous due diligence to ensure adherence to ESG criteria Adopt circular economy principles to reduce waste and maximise resource efficiency Invest in technologies that improve supply chain sustainability, such as energy-efficient logistics or renewable material sourcing Conduct regular audits and transparently report sustainability efforts to stakeholders Positive implications Long-term cost savings from improved resource efficiency and reduced waste Increased access to ESG-linked financing and investment Enhanced brand value and market share driven by stakeholder trust Lower risk of supply chain disruptions, ensuring operational continuity Reduced regulatory and reputational risks, safeguarding future revenue streams Percentage of suppliers meeting sustainability criteria Reduction in carbon footprint and waste within the supply chain Percentage of products sourced from renewable materials or sustainable sources Compliance rate with international ESG standards and regulations External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25172
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Human Capital Development Enhance employees’ skills, knowledge, and abilities to maximise their contribution to the organisation Focus on the acquisition, training, management, and retention of employees Invest in training, professional growth, well-being initiatives, and talent optimisation in AI/ ML, credit and risk, and tech & engineering Boost productivity, foster innovation, and drive long-term value for both employees and your Company Investing in employee development fosters a more adaptable and resilient workforce, essential for driving productivity, innovation, and overall customer satisfaction. As industries evolve and technology transforms the business landscape, the demand for a skilled, future-ready workforce becomes critical to sustaining long-term growth and staying competitive. This emphasis on human capital ensures the organisation remains agile, prepared to face emerging challenges, and capable of seizing new opportunities. Fostering a culture of continuous learning and innovation by introducing tailored training programmes and leadership academies Partnering with industry experts, educational institutions, and skill- development agencies to design specialised programmes Encouraging internal mobility and cross-functional learning to increase knowledge sharing and build a versatile workforce Implementing performance management systems that align personal growth with organisational goals, ensuring a clear path for career progression Positive implications Improved employee performance, reduced turnover, and higher engagement Better financial results and ROI through strategic development Skilled employees foster innovation and enhance operational efficiency Development of a well-trained workforce positively impacts long-term profitability Employee retention rate and turnover ratio Employee satisfaction and engagement scores Number of employees completing development programmes and leadership training Improvement in individual and team performance metrics post-training Internal promotion rate and career progression metrics Cost-to-benefit ratio of training and development initiatives Internal Sustainable Value Chain Ensures ESG compliance across all operations, including vendor engagement, business partners (DSAs and agents), ethical client interactions, and financial reporting, among others Embeds ESG factors throughout these processes to enhance efficiency, manage risks, and contribute to societal and environmental goals With an increasing global emphasis on ESG factors, integrating sustainability across the value chain is becoming essential for future-ready businesses. Responsible vendor relationships, ethical client engagement, and transparent financial reporting are key to building stakeholder trust, addressing growing consumer expectations, investor preferences, and regulatory requirements— turning compliance into a competitive advantage. Strengthen partnerships with suppliers who follow sustainable practices Implement rigorous due diligence to ensure adherence to ESG criteria Adopt circular economy principles to reduce waste and maximise resource efficiency Invest in technologies that improve supply chain sustainability, such as energy-efficient logistics or renewable material sourcing Conduct regular audits and transparently report sustainability efforts to stakeholders Positive implications Long-term cost savings from improved resource efficiency and reduced waste Increased access to ESG-linked financing and investment Enhanced brand value and market share driven by stakeholder trust Lower risk of supply chain disruptions, ensuring operational continuity Reduced regulatory and reputational risks, safeguarding future revenue streams Percentage of suppliers meeting sustainability criteria Reduction in carbon footprint and waste within the supply chain Percentage of products sourced from renewable materials or sustainable sources Compliance rate with international ESG standards and regulations External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 173
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Diversity, Equity and Inclusion Creating an inclusive and diverse working environment for all employees, i.e., no discrimination based on age, cultural background, physical abilities and disabilities, race, religion, sex, and sexual orientation, among others via appropriate policies and procedures. E.g., recruiting women for managerial and leadership roles, being inclusive of individuals with disabilities into the workforce, and implementing targeted initiatives and strategies that emphasize DE&I principles. Placing a strategic emphasis on Diversity, Equity, and Inclusion (DE&I) catalyses innovation, enhances workforce satisfaction, and improves employee retention, thereby supporting sustained success. This approach nurtures an environment that draws a broader talent pool, while simultaneously promoting collaboration and creativity - critical elements for gaining a competitive advantage in an ever-evolving marketplace. Implementing and strengthening DE&I policies through training, leadership development, and mentorship programmes Investing in platforms and resources to integrate DE&I into daily operations and decision-making Monitoring DE&I progress using metrics and data to evaluate initiatives Reviewing recruitment, talent management, and communication strategies to promote DE&I Fostering safe spaces for open dialogue and employee feedback to drive continuous improvement Positive implications Improved employee retention, reducing recruitment and training costs Enhanced brand reputation, leading to greater customer loyalty and sales growth Increased productivity and innovation contributing to higher revenue Access to diverse talent pools, driving innovation and better decision-making Lower talent acquisition cost % of women in Senior Management positions % of women in the total workforce Number of persons with disabilities in the workforce % of people employed across different regions % of women in revenue generating roles Internal Geopolitical Risks Refers to uncertainties and potential threats arising from political, economic, and social changes on a global scale Includes conflicts between states, trade disputes, sanctions, and shifts in international relations These factors can affect global markets, supply chains, and national security They influence everything from energy prices to cross-border investments Given the seamless integration of global financial markets, geopolitical events such as trade wars, sanctions, and armed conflicts can significantly disrupt cross-border transactions, foreign investments, and currency stability, leading to financial volatility and regulatory uncertainties. Diversifying investments across different regions to reduce exposure Monitoring political climates and emerging risks continuously Conducting regular stress tests to assess how geopolitical risks could affect financial outcomes Building flexibility into financial strategies and maintain strong international partnerships to navigate risks Negative implications Potential investment losses, higher financing costs, and disruptions to operations and supply chain Shifts in trade policies or currency values may lower profitability and challenge long- term financial stability Investment diversification across regions Proportion of assets exposed to geopolitical risks Frequency of geopolitical risk assessments Internal, External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25174
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Diversity, Equity and Inclusion Creating an inclusive and diverse working environment for all employees, i.e., no discrimination based on age, cultural background, physical abilities and disabilities, race, religion, sex, and sexual orientation, among others via appropriate policies and procedures. E.g., recruiting women for managerial and leadership roles, being inclusive of individuals with disabilities into the workforce, and implementing targeted initiatives and strategies that emphasize DE&I principles. Placing a strategic emphasis on Diversity, Equity, and Inclusion (DE&I) catalyses innovation, enhances workforce satisfaction, and improves employee retention, thereby supporting sustained success. This approach nurtures an environment that draws a broader talent pool, while simultaneously promoting collaboration and creativity - critical elements for gaining a competitive advantage in an ever-evolving marketplace. Implementing and strengthening DE&I policies through training, leadership development, and mentorship programmes Investing in platforms and resources to integrate DE&I into daily operations and decision-making Monitoring DE&I progress using metrics and data to evaluate initiatives Reviewing recruitment, talent management, and communication strategies to promote DE&I Fostering safe spaces for open dialogue and employee feedback to drive continuous improvement Positive implications Improved employee retention, reducing recruitment and training costs Enhanced brand reputation, leading to greater customer loyalty and sales growth Increased productivity and innovation contributing to higher revenue Access to diverse talent pools, driving innovation and better decision-making Lower talent acquisition cost % of women in Senior Management positions % of women in the total workforce Number of persons with disabilities in the workforce % of people employed across different regions % of women in revenue generating roles Internal Geopolitical Risks Refers to uncertainties and potential threats arising from political, economic, and social changes on a global scale Includes conflicts between states, trade disputes, sanctions, and shifts in international relations These factors can affect global markets, supply chains, and national security They influence everything from energy prices to cross-border investments Given the seamless integration of global financial markets, geopolitical events such as trade wars, sanctions, and armed conflicts can significantly disrupt cross-border transactions, foreign investments, and currency stability, leading to financial volatility and regulatory uncertainties. Diversifying investments across different regions to reduce exposure Monitoring political climates and emerging risks continuously Conducting regular stress tests to assess how geopolitical risks could affect financial outcomes Building flexibility into financial strategies and maintain strong international partnerships to navigate risks Negative implications Potential investment losses, higher financing costs, and disruptions to operations and supply chain Shifts in trade policies or currency values may lower profitability and challenge long- term financial stability Investment diversification across regions Proportion of assets exposed to geopolitical risks Frequency of geopolitical risk assessments Internal, External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 175
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Operational Eco-Efficiency Reduce the overall environmental footprint (waste, water, and energy, among others) of your Company. Optimise the use of natural resources to achieve positive business implications, including operational cost reduction. Protect human rights by identifying areas within operations susceptible to violations. Implement systems and processes to safeguard against human rights violations. Actively promote a culture of respect and support for human rights across the organisation and its value chain. By streamlining operations for greater efficiency, LTF can not only reduce operational costs over the long haul but also comply with environmental regulations, help in preparedness to mitigate climate-related risks, thereby strengthening its reputation as a responsible corporate entity. Sustainable business practices will also play a pivotal role in enhancing public perception and increasing stakeholder trust, particularly among environmentally-conscious investors and clientele. Investing in energy-efficient infrastructure and renewable energy sources Optimising supply chain and production processes to reduce waste Leveraging data analytics to monitor resource usage and implement green technology solutions Aligning operational practices with sustainability goals Positive implications Cost savings from energy, waste, and resource efficiency improvements Achieving carbon reduction and contribution to Net Zero economy Potential for higher profit margins due to reduced operational costs Attractiveness to eco-conscious investors could lead to more funding opportunities or lower capital costs Energy consumption reduction (kWh per unit of production) Waste diversion percentage (from landfills) Water usage efficiency (gallons per unit of production) Carbon emissions reduction (tonnes of CO2 saved annually) Percentage of operations powered by renewable energy Savings from energy and resource efficiency improvements Internal, External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25176
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Operational Eco-Efficiency Reduce the overall environmental footprint (waste, water, and energy, among others) of your Company. Optimise the use of natural resources to achieve positive business implications, including operational cost reduction. Protect human rights by identifying areas within operations susceptible to violations. Implement systems and processes to safeguard against human rights violations. Actively promote a culture of respect and support for human rights across the organisation and its value chain. By streamlining operations for greater efficiency, LTF can not only reduce operational costs over the long haul but also comply with environmental regulations, help in preparedness to mitigate climate-related risks, thereby strengthening its reputation as a responsible corporate entity. Sustainable business practices will also play a pivotal role in enhancing public perception and increasing stakeholder trust, particularly among environmentally-conscious investors and clientele. Investing in energy-efficient infrastructure and renewable energy sources Optimising supply chain and production processes to reduce waste Leveraging data analytics to monitor resource usage and implement green technology solutions Aligning operational practices with sustainability goals Positive implications Cost savings from energy, waste, and resource efficiency improvements Achieving carbon reduction and contribution to Net Zero economy Potential for higher profit margins due to reduced operational costs Attractiveness to eco-conscious investors could lead to more funding opportunities or lower capital costs Energy consumption reduction (kWh per unit of production) Waste diversion percentage (from landfills) Water usage efficiency (gallons per unit of production) Carbon emissions reduction (tonnes of CO2 saved annually) Percentage of operations powered by renewable energy Savings from energy and resource efficiency improvements Internal, External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 177
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Human Rights Protection Identifying areas within operations that are susceptible to human rights violations Implementing systems and processes to safeguard against such violations Actively promoting a culture of respect and support for human rights across the organisation and its value chain Risk Non-adherence to human rights principles can result in reputational damage, legal penalties, and loss of stakeholder trust. It may also impact business continuity, investor confidence, and overall brand credibility in increasingly ethics- focused markets. Opportunity Prioritising human rights strengthens corporate image and fosters stakeholder confidence. Alignment with global human rights frameworks enhances market differentiation and attracts values-driven investors. It also improves the ability to attract and retain talent, builds stronger brand equity, and supports long-term sustainable growth through ethical business practices. Risk Ensuring compliance with human rights standards through regular assessment Providing training and raising awareness on human rights issues among employees and partners Establishing grievance mechanisms to address potential violations effectively Conducting periodic human rights assessments and due diligence across LTF’s offices and branches Implementing strict monitoring and auditing processes across supply chains Opportunity Developing proactive human rights initiatives that align with global standards Partnering with organisations that promote and protect human rights Promoting transparency and responsible business practices across all operations Negative implications Potential fines or lawsuits Reputational damage leading to loss of business or reduced customer trust Financial losses due to market share reduction and legal costs Positive implications Enhanced brand reputation Increased customer loyalty and trust, fostering long-term growth Higher investor confidence, leading to increased capital and market value Increased access to capital from socially conscious investors Reduced costs relating to talent acquisition opportunities Improved risk management % of employees who received training on human rights Number of value chain partners covered by the Third-Party Code of Conduct Internal, External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25178
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Human Rights Protection Identifying areas within operations that are susceptible to human rights violations Implementing systems and processes to safeguard against such violations Actively promoting a culture of respect and support for human rights across the organisation and its value chain Risk Non-adherence to human rights principles can result in reputational damage, legal penalties, and loss of stakeholder trust. It may also impact business continuity, investor confidence, and overall brand credibility in increasingly ethics- focused markets. Opportunity Prioritising human rights strengthens corporate image and fosters stakeholder confidence. Alignment with global human rights frameworks enhances market differentiation and attracts values-driven investors. It also improves the ability to attract and retain talent, builds stronger brand equity, and supports long-term sustainable growth through ethical business practices. Risk Ensuring compliance with human rights standards through regular assessment Providing training and raising awareness on human rights issues among employees and partners Establishing grievance mechanisms to address potential violations effectively Conducting periodic human rights assessments and due diligence across LTF’s offices and branches Implementing strict monitoring and auditing processes across supply chains Opportunity Developing proactive human rights initiatives that align with global standards Partnering with organisations that promote and protect human rights Promoting transparency and responsible business practices across all operations Negative implications Potential fines or lawsuits Reputational damage leading to loss of business or reduced customer trust Financial losses due to market share reduction and legal costs Positive implications Enhanced brand reputation Increased customer loyalty and trust, fostering long-term growth Higher investor confidence, leading to increased capital and market value Increased access to capital from socially conscious investors Reduced costs relating to talent acquisition opportunities Improved risk management % of employees who received training on human rights Number of value chain partners covered by the Third-Party Code of Conduct Internal, External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 179
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Community Development Engaging with local communities around operational locations as part of a company’s stakeholder engagement strategy Taking proactive steps to uplift and support these communities Aiming for sustainable and inclusive growth Ensuring compliance with CSR (Corporate Social Responsibility) regulations Investment in community development serves as a strategic lever for elevating brand equity, nurturing strong local partnerships, and validates your Company’s licence to operate. By supporting local progress, the organisation contributes to the holistic development of these communities, which can ultimately fuel enduring growth through improved market stability, a capable workforce, and enhanced regional infrastructure. Implementing community development programmes that align with your Company's core values Focussing on areas like education, healthcare, infrastructure, and skill- building Partnering with the government, NGOs, and other key stakeholders for collaboration and scaling Monitoring and assessing the impact of initiatives continuously to ensure sustainable outcomes Encouraging employee involvement in community initiatives to foster a sense of engagement Positive implication Increase in brand appreciation and revenue share from socially conscious customers Regulatory benefits, tax incentives, and access to government programmes for community investment Contribution to achieving SDGs Number of CSR beneficiaries Number of villages covered through CSR initiatives Social Return on Investment of CSR initiatives Internal, External Manufactured and Intellectual Capital Financial CapitalRisk Opportunity Integrated Annual Report 2024-25180
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Material Topic Risk/ Opportunity Explanation Rationale for identifying the Risk and Opportunity In case of Risk/Opportunity, approach to adapt or mitigate Financial implication of Risk or Opportunity (indicate positive or negative implications) KPIs Boundary Capital Linkage SDG Linkage Community Development Engaging with local communities around operational locations as part of a company’s stakeholder engagement strategy Taking proactive steps to uplift and support these communities Aiming for sustainable and inclusive growth Ensuring compliance with CSR (Corporate Social Responsibility) regulations Investment in community development serves as a strategic lever for elevating brand equity, nurturing strong local partnerships, and validates your Company’s licence to operate. By supporting local progress, the organisation contributes to the holistic development of these communities, which can ultimately fuel enduring growth through improved market stability, a capable workforce, and enhanced regional infrastructure. Implementing community development programmes that align with your Company's core values Focussing on areas like education, healthcare, infrastructure, and skill- building Partnering with the government, NGOs, and other key stakeholders for collaboration and scaling Monitoring and assessing the impact of initiatives continuously to ensure sustainable outcomes Encouraging employee involvement in community initiatives to foster a sense of engagement Positive implication Increase in brand appreciation and revenue share from socially conscious customers Regulatory benefits, tax incentives, and access to government programmes for community investment Contribution to achieving SDGs Number of CSR beneficiaries Number of villages covered through CSR initiatives Social Return on Investment of CSR initiatives Internal, External Natural Capital Human Capital Social and Relationship Capital Corporate Overview Statutory Reports Financial Statements L&T Finance 181
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Performance for Medium-to-Long-Term Targets FY25 Target Achievements SDG Mapping Become carbon neutral by FY35 On track to achieve carbon neutrality target by FY35 Increase the share of women representation to 8% of total workforce by FY30 Increased women's representation in total workforce from 4.6% to 5.4% in FY25 Achieve 3x increase in villages covered through CSR activities by FY28 compared to FY24 2x increase in villages covered through CSR activities Increase the share of women representation to 18% in Senior Management positions by FY26 Women representation of 18% in Senior Management maintained in FY25 Increase the share of women representation to 15% in Middle and Senior Management positions by FY26 Women representation of 9% maintained in FY25 Achieve an average of 35 hours of training across all employee categories by FY26 Achieved 38.5 average hours of training in FY25 Achieve/Maintain 40% contribution of loan book towards rural livelihood financing in FY25 40% contribution of loan book towards rural livelihood achieved Increase the number of women borrowers receiving Rural Group Loans and Micro Finance to 70 Lakh by FY25 61,06,208* women micro loan borrowers in FY25 Use of 50% recycled paper in operations by FY25 Target achieved for stationery savings, except for hard copy sets preserved in compliance with regulatory requirements under applicable law Community outreach to be 7,50,000 members every year till FY25 Community outreach was increased to 16.93 lakh+ in FY25 Translating Commitment into Measurable Change Recognising that meaningful progress requires clear direction and consistent action, LTF advanced significantly towards the ESG targets it had set for FY25 which were approved by the CSR and ESG Committee. These achievements reflect more than intent—they demonstrate a structured, outcome-driven approach to responsible growth. * Adoption of stringent credit policy in-light of stress faced by the industry and shift of focus from growth to risk & portfolio management, the number is less than target. Integrated Annual Report 2024-25182
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Performance for Short-term Targets FY25 Target Achievements SDG Mapping To support rural micro-entrepreneurs in expanding their business, aim to maintain proportion of customers availing rural group loans and microfinance at 50% Out of the total loan disbursed in FY25, 60% of disbursements were to repeat customers Maintain 50% contribution of rural loan book in FY25 from low-income states 50% contribution from rural loan book from low income states in FY25 Raise sustainability focused/priority sector funding worth ₹ 4,000 Cr Raised ₹ 20,480 Cr sustainability focused/priority sector funding Deploy & measure Net Promoter Score (NPS) for customer interactions with various touch points Achieved an NPS of 54 10% increase in adoption of digital mode of payments among target rural communities in the Digital Sakhi project 25% increase in adoption of digital mode of payments among targeted rural communities in the Digital Sakhi project Inclusion of DE&I sensitisation & awareness session for employees DE&I gamified module rolled out 8 languages Undertake Employee Engagement Survey Completed GPTW Survey for FY25 with over 80% employee participation Conduct Business Impact Study (BIS) for one rural product Conducted Business Impact Study covering entire product portfolio Maintain Water Positive/Surplus status Maintained Water Positive/Surplus Status by replenishing ~176 lakh kL of water Achieve 50,000 tree plantation 1,00,000+ saplings planted Establish a dedicated EV Financing vertical to encourage sustainable product financing and finance over 74,000 EVs 64,759* EVs financed in FY25 Develop Sustainable Procurement Policy Adopted Sustainable Procurement Policy Use PLANET App across business to reduce the scope 3 emission 1) Driving digital collections of more than ₹ 1,200 Cr through PLANET App 2) Servicing 2.5 Cr service resolutions through the PLANET App ₹ 2,594 Cr collected through PLANET App in FY25 4.5 Cr customer service resolutions delivered through the PLANET App *Challenges faced by EV sector leading to change in strategy to de-risk portfolio in the long term. Corporate Overview Statutory Reports Financial Statements L&T Finance 183
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Sustainability Targets FY26 Medium-to-Long-Term Targets Target Material Topic Mapping SDG Mapping Become carbon neutral by FY35 Climate and Decarbonisation Strategy Increase the share of women representation to 8% of the total workforce by FY30 Diversity, Equity and Inclusion Improve customer satisfaction rate (NPS Score) to 70 by FY29 Customer Experience and Satisfaction Improve accessibility to workplace for Persons with Disability (PwDs) for all large offices and major branches by FY29 Diversity, Equity and Inclusion Achieve ISO 37701:2019 Compliance Management Certification by 2028 Legal and Regulatory Compliance Increase awareness on digital and financial inclusion amongst 1 Cr community members by FY28 Community Development Achieve 3x increase in villages covered through CSR activities by FY28 compared to FY24 Community Development Expanding green cover by planting 5 lakh horticulture saplings, thereby augmenting farmers' income by FY28 Community Development Quarterly consumer awareness programmes including cybersecurity awareness for customers across various social media platforms and other sources till FY27 Privacy and Data Security Encourage sustainable product financing by financing 90,000 EVs by FY27 Sustainable and Responsible Finance LTF's commitment to sustainability through ambitious targets With an eye on the future, and as recommended by SSC, and approved by the CSR and ESG committee, LTF has now defined a refreshed set of ESG goals for FY26, building on the learnings and momentum from the past year. This section highlights the breadth of your Company’s sustainability vision, and sets the stage for its continued journey. Integrated Annual Report 2024-25184
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Sustainability Targets FY26 Short-Term Targets Target Material Topic Mapping SDG Mapping Engagement of Independent Director(s) with external stakeholders once a year Corporate Governance and Ethics Train risk team on ESG issues and its role in risk management in FY26 Risk and Crisis Management Drive digital collections of more than ₹ 3,000 Cr through PLANET App in FY26 Innovation and Digitisation 5 Cr service resolutions through the PLANET App in FY26 Innovation and Digitisation Roll out chatbot facility to guide customers on cybersecurity and safety in FY26 Privacy and Data Security Achieve sustainability focused loan / PSL of ₹ 1,000 Cr every quarter. (annual target ₹ 4,000 Cr) for FY26 Financial Inclusion Sustainability Targets FY26 Medium-to-Long-Term Targets Target Material Topic Mapping SDG Mapping Achieve ISO 45001:2018 certification at 4 large offices/branches and ensure periodic reviews for compliance by FY27 Human Capital Development Achieve ISO 14001 Certification for Environmental Management System for Head Office by FY27 Operational Eco-Efficiency Corporate Overview Statutory Reports Financial Statements L&T Finance 185
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Sustainability Targets FY26 Short-Term Targets Target Material Topic Mapping SDG Mapping Support 75,000 farmers through Farmer Finance in FY26 Sustainable and Responsible Finance Undertake employee engagement survey in FY26 Human Capital Development Achieve 30,000 hours of employee training on ESG by FY26 Human Capital Development Achieve an average of 35 hours of training across all employee categories in FY26 Human Capital Development 100% of employees to be trained on occupational health and safety practices in FY26 Human Capital Development Conduct Hazard Identification and Risk Assessment (HIRA) at 25 branches, including zonal and small offices, to proactively identify hazards, assess risks, and implement measures for accident prevention and a safe working environment. Human Capital Development Conduct annual value chain awareness on human rights in FY26 Sustainable Value Chain Integrated Annual Report 2024-25186
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Sustainability Targets FY26 Short-Term Targets Target Material Topic Mapping SDG Mapping Increase the share of women representation to 18% in Senior Management positions by FY26 Diversity, Equity and Inclusion Increase the share of women representation to 15% in Middle and Senior Management positions by FY26 Diversity, Equity and Inclusion Maintain 100% e-waste recycling rate in FY26 Operational Eco-Efficiency Increase disclosure on purchased goods beyond paper waste generation in FY26 Operational Eco-Efficiency Maintain Water Positive/Surplus status in FY26 Operational Eco-Efficiency Corporate Overview Statutory Reports Financial Statements L&T Finance 187
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Fuelling Growth, Securing the Future Financial Capital Alignment to UN SDGs Impact on Material Issues Return on Equity/Return to Shareholders GRI Linkages GRI 201: Economic Performance GRI 203: Indirect Economic Impacts GRI 401: Employment GRI 302: Energy GRI 305: Emissions GRI 413: Local Communities GRI 207: Tax Sustainable and Responsible Finance The key to unlocking sustained success resides in nurturing a solid financial foundation that drives both responsible growth and resilience. A strong financial foundation is the catalyst that transforms vision into reality, ensuring businesses thrive across economic cycles and continue to create value for its stakeholders LTF is committed to establishing a robust economic foundation that empowers the organisation to transform its objective into reality, ensuring it delivers across various economic cycles. Moreover, your Company recognises the intrinsic link between sustainability and long-term economic success, integrating responsible resource management into its core strategy. This commitment is guided by the principles of the UN SDGs. By strategically aligning its initiatives with key SDGs, LTF enhances its operational efficiency and generates enduring value for its stakeholders. These concerted efforts reinforce LTF’s role as a leader in promoting inclusive and sustainable economic advancement. Integrated Annual Report 2024-25188
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97% Retailisation ₹ 97,762 Cr Book size ₹ 60,040 Cr Total Retail Disbursements ₹ 2,644 Cr 2.44% 3.35 Highest Ever Annual PAT Highest Ever Return on Assets (RoA) Debt-to-Equity Ratio 10.87% Return on Equity (RoE) ₹ 102.5 Book Value per Share ₹ 20,480 Cr Sustainability Focused/Priority Sector Loans 22.27% Capital to Risk (Weighted) Assets Ratio (CRAR) Key Highlights 3.29% GS3 0.97% NS3 Corporate Overview Statutory Reports Financial Statements L&T Finance 189 L&T Finance 189
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Capitals Impacted Manufactured and Intellectual Capital LTF focusses on expanding its finance offerings and immediate investments in infrastructure and technology helping long- term innovation initiatives. Enhancing physical assets may foster short-term allocation of resources towards developing sustainable financial products, while driving innovation. Social and Relationship Capital The emphasis on financial performance, though essential for shareholder returns, is also critical for engagement with local communities. A profit-centric approach along with social engagement helps build the reputation and fosters trust and collaboration within the communities LTF serves. Natural Capital Your Company’s drive for profitability through a broad range of financial offerings need to go hand-in-hand with the imperative of preserving natural capital. The optimised use of resources helps in long-term environmental sustainability, demonstrating a careful balance between economic gain and environmental stewardship. Human Capital The drive to maximise investor returns also involves employee training and development programmes. This helps in increasing workforce competence and morale, potentially having positive impact on productivity and furthering your Company's long- term innovation strategy. Integrated Annual Report 2024-25190
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In FY25, LTF maintained its strong financial trajectory, achieving record profitability and enhanced operational excellence. The increased retailisation of the total portfolio to 97% reaffirmed LTF’s commitment to a well-diversified and granular retail lending strategy, which has historically provided greater stability and resilience amid market fluctuations. Your Company’s strong credit governance and risk management strategies and focused collection efforts, showcase your Company's commitment to strong asset quality. These efforts have led to the consolidated PAT increase to ₹ 2,644 Cr a 14% YoY rise, representing the highest annual PAT in your Company’s history. This profit growth was driven by resilient NIMs + Fees in a volatile credit environment, showcasing LTF’s ability to optimise both interest margins and fee-based income streams. Your Company also achieved highest ever annual RoA of 2.44%. Capital adequacy remained strong, with a CRAR of consolidated 22.27%, ensuring your Company remains well-capitalised for sustained growth, while maintaining a prudent buffer against market volatility. Additionally, the debt-to-equity ratio is 3.35 in FY25, highlighting LTF’s disciplined approach to capital management and its strategic focus on deleveraging while expanding its retail portfolio. The combined impact of these initiatives reinforces LTF’s position as a financially resilient and growth-driven organisation. Stable Credit Cost LTF strategically responded to macroeconomic challenges like prolonged heat waves, severe floods, and temporary slowdowns in government expenditures due to general elections, among others. The provisions, set aside during COVID (FY21 & FY22), were wisely carried forward by LTF. They served as a LTF’s financial resource strength and operational excellence underpin its sustainable growth and year-round profitability. LTF has expanded its retail finance offerings to address the diverse financial needs of individuals and enterprises nationwide. A stable, diversified liability profile, built with a long-term perspective, has strengthened LTF’s business model, advancing financial inclusion for millions, particularly unserved and underserved rural borrowers, including women. This disciplined approach has strengthened the balance sheet, ensured resilience and delivered consistent returns. Moreover, it has promoted social equity by emphasising priority sector lending. Your Company effectively synchronises its financial capital with strategic objectives to sustain profitability and drive inclusive economic advancement. LTF’s disciplined management of resources and strategic execution has fuelled exceptional performance, enabling your Company to surpass its Lakshya 2026 targets two years ahead of schedule in FY24. Capitalising on this momentum, your Company is focused on further strengthening its operations and financial robustness, reinforcing its commitment to sustainable growth and inclusive progress. financial safeguard against future uncertainties. Totalling ₹ 975 Cr, these provisions were specifically allocated to the Rural Group Loans & Microfinance ('RGL & MFI') business. This allocation aimed to protect against unforeseen macroeconomic events. Due to the impact of external disruption in the rural economy, the Audit Committee and Board approved the utilisation of ₹ 400 Cr in FY25. This decision aimed to offset the credit costs in these segments due to macro economic events. This proactive approach helped deliver stable credit cost outcome in an adverse cycle, thereby adequately protecting the balance sheet. Your Company expects, in absence of any further new events, a return to normalised collection efficiency by Financial Performance Corporate Overview Statutory Reports Financial Statements L&T Finance 191
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early Q2FY26 for LTF. By effectively deploying the reserves, LTF has demonstrated its ability to navigate adverse market conditions while maintaining stable asset quality. LTF leverages its robust financial health, disciplined credit underwriting and risk management, and well- calibrated growth strategy to sustain its leadership position in the retail lending space. Enhancing Shareholder Value with Strategic Growth LTF remains committed to delivering sustained value to its investors and shareholders through responsible governance, transparency, and integrity. By focussing on revenue growth and prudent financial management, your Company continues to maximise shareholder returns. Reinforcing this commitment, LTF ensures transparent disclosures and active investor engagement through quarterly calls and regular analyst meetings. As your Company progresses towards becoming a technology driven company, it has adopted a 5-Pillar execution strategy. These strategic pillars have been the foundation of LTF’s financial achievements. Please refer to the Management Discussion and Analysis section to understand the details of the 5-Pillar execution strategy. Resilient Asset Quality ‘0 DPD’ for LTF’s 3 fulcrum products: Best-in-class 0 DPD portfolio of LTF vis-a-vis the industry Industry LTF Retail Asset Quality Two-Wheeler Finance 79.6% 89.0% Rural Group Loans and Micro Finance (JLG) 80.2% 94.9% 78.2% 87.6% Farm Equipment Finance LTF has upheld its reputation for strong credit discipline. This is reflected in its Provision Coverage Ratio (PCR) of 71%, reflecting its prudent approach to risk management and ensuring resilience in a dynamic operating environment. The Retail Net Stage 3 at 0.81% further underscores the effectiveness of your Company’s risk-mitigation strategies. LTF remains committed to maintaining strong asset quality through a disciplined risk management framework and proactive provisioning. In FY25, your Company continued to strengthen its financial resilience by carrying macro- prudential provisions on its retail portfolio. LTF also maintains GS3 provisions and recognises Expected Credit Loss (ECL) on standard assets. *Industry figures are for immediately preceding quarter as per CRIF highmark data Integrated Annual Report 2024-25192
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Proactive Asset-Liability Management (ALM) is crucial for ensuring liquidity, stability, and operational efficiency in an NBFC. In FY25, LTF navigated a dynamic interest rate environment with a well-calibrated asset management strategy, ensuring an optimal balance between cost and liquidity. Diversified liability mix has enabled restricting the quarterly WACB by 1 bps (QoQ) to 7.84% in Q4FY25. Your Company managed superior WACB with a mere 33 bps increase over the past 3 years, while policy rates have moved up significantly. Additionally, LTF sustained cumulative positive liquidity gaps. This was despite significant inflows from prepayments and sell-downs in the wholesale book, underscoring your Company’s robust ALM and investment strategy. Proactive Asset-Liability Management for Financial Stability Retail Asset Quality Consolidated Asset Quality PCR (%)NS3 (%)GS3 (%)NS3 (₹ in Cr)GS3 (₹ in Cr) Retail and Consolidated Asset Quality Q4FY24 Q4FY24 2,271 2,698 485 661 79% 76% Q3FY25 Q3FY25 2,627 3,075 729 905 72% 71% Q4FY25 Q4FY25 2,763 3,218 753 929 73% 71% 2.84% 3.15% 2.85% 3.23% 2.90% 3.29% 0.81% 0.97% 0.81% 0.97% 0.62% 0.79% Corporate Overview Statutory Reports Financial Statements L&T Finance 193
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Q4 FY23 Q2 FY24 Q1 FY24 Q4 FY24 Q2 FY25 Q3 FY25 Q3 FY24 Q1 FY25 Q4 FY25 Weighted Average Cost of Borrowing (WAC) 7.71% 7.77% 7.79% 7.81% 7.82% 7.85% 7.80% 7.83% 7.84% 35 26 5 3 20 26 28 27 2 23 85 7 2 1 NCD Private Others FI Loan ECB Bank Loan – PSL CP Bank Loan – Non PSL Retail NCD Diversified Liability Mix (%) March-25March-24 Total Liabilities: ₹ 76,541 Cr Total Liabilities: ₹ 92,247 Cr Prudent ALM along with changing portfolio mix towards retail Leveraged Retail Asset profile to garner competitive funding FY22 FY23 FY24 FY25 7.50% 7.46% 7.80% 7.83% Integrated Annual Report 2024-25194
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ICRA AAA (Stable)/ICRA A1+ CRISIL AAA Rating (Stable)/ CRISIL A1+ IND AAA (Stable)/IND A1+ CARE AAA (Stable)/ CARE A1+ Over the years, the diversification of funding sources through Sustainability- linked Loans and Social Loans has also provided multiple strategic advantages to your Company. By securing sustainability-focused capital, your Company has been able to optimise its cost of funds, thereby enhancing profitability and financial flexibility. These funding avenues have also reinforced LTF’s ESG commitments, aligning with global sustainability goals and investor expectations. Strong Credit Ratings In FY25, LTF continued to demonstrate robust financial health and creditworthiness, as reaffirmed by CRISIL in its latest rating rationale dated September 3, 2024. Your Company has maintained its superior ratings across various debt instruments, reflecting its strong credit profile and operational resilience. Highest Credit Rating 'AAA' L&T Finance has a 'AAA' rating from all the key Rating Agencies namely, Crisil Ratings, ICRA, India Rating and CARE Ratings. 'AAA' rating to the debt securities are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such securities carry lowest credit risk. Following are some of the key strengths highlighted by rating agencies: Diversified business mix with strong presence across the financial services space Strategic importance and strong support provided by the parent, Larsen & Toubro Limited, to the financial services business Strong resource raising ability and adequate capitalisation Comfortable liquidity position Strengths and Challenges LTF has benefitted from strong parentage, diversified funding, and solid financial performance, supporting its stable credit profile. Your Company has a growing retail loan portfolio and continues to enhance its business strategy. Moreover, LTF has targeted carbon neutrality by 2035 and is focussing its efforts on financial inclusion and adopting green initiatives. However, challenges continue to persist, in light of the macro economic factors, both globally and domestically. These factors require careful risk management to maintain financial stability. The high credit ratings awarded to LTF reflect the trust that rating agencies place in its financial strength, operational effectiveness, and strategic planning. As your Company advances its growth agenda in FY25, it remains dedicated to upholding the highest standards of creditworthiness and transparency. By reinforcing governance, optimising risk management, and maintaining a solid financial foundation, LTF aims to sustain its leadership position in the industry. Long-Term/Short-Term Ratings of LTF Rating Agency Consolidated Statement of Economic Value Generated and Distributed for FY25 Sr. No.Particulars Year Ended March 31, 2025 (₹ in Cr) Year Ended March 31, 2024 (₹ in Cr) 1. Economic Value Generated a. Turnover 15,924.24 13,580.58 b. Other Income 254.74 675.38 Total Economic Value Generated 16,178.98 14,255.96 2. Economic Value Distributed a. Operating Cost 1,607.30 1,583.50 b. Employee Wages and Benefits 2,216.51 1,806.37 c. Payments to Providers of Capital 6,619.22 5,873.80 d. Payments to Governments 1,003.81 916.53 e. CSR Initiatives and Donation 21.86 3.23 Total Economic Value Distributed 11,468.70 10,183.43 3. Economic Value Retained 4,710.28 4,072.53 Corporate Overview Statutory Reports Financial Statements L&T Finance 195
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As part of these strategic initiatives, LTF’s policy includes a strict exclusion list, ensuring that its financing practices do not back activities that are harmful to society, the environment, or human rights. LTF Credit Policy: A Strong and Ethical Lending Framework LTF’s credit policy is the foundation upon which its lending decisions are based, ensuring alignment with your Company’s principles of sustainability, responsibility, and robust risk management. The policy reflects a proactive approach to managing risk and incorporating both established industry standards and internal best practices. The key aspects of your Company’s credit policy include: Ongoing Monitoring and Adaptability Monitors market conditions and adjusts its policies continuously to address evolving risks and opportunities. Commitment to Responsible Lending Ensures ethical lending to guarantee that its policies are aligned with responsible financial practices and regulatory requirements. Adherence to Industry Standards Follows industry-leading guidelines to assess and ensure regulatory compliance. Dual Underwriting Approach Combines conventional underwriting methods with a scorecard-based decisioning model, evaluating creditworthiness from multiple angles. The exclusion list prohibits financing for: Forced Labour and Exploitative Child Labour Wildlife Trade Gambling, Casinos, and Equivalent Enterprises Weapon Production and Trade Hazardous Substances and Banned Chemicals Mining and Thermal Energy Projects By maintaining these exclusions, LTF ensures its financial activities contribute constructively to society and align with your Company’s core values. Additionally, your Company understands that environmental risk is a decisive factor in lending decisions. Your Company’s credit policy includes environmental evaluations, ensuring that loan approvals consider financial stability and resilience to environmental challenges. Key environmental factors considered during loan appraisals include: Floods, droughts, cyclones, and extreme weather conditions Earthquakes and seismic risks This concentrated focus on environmental risk ensures that LTF’s financing decisions support loans that are resilient in confronting climate-related difficulties. Integrated Annual Report 2024-25196
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Tax Strategy LTF is dedicated to adhering to tax laws in its operational geographies. Ensuring timely statutory tax compliance, LTF makes necessary disclosures. It legitimately leverage tax incentives as per applicable law. Your Company has effective systems to identify and report taxation risks, seeking updates and providing training. LTF operates in India, aligning tax reports with local laws. Compliance is crucial for uninterrupted operations, and your Company remains committed to its tax responsibilities. LTF's Portfolio Mix Rural Urban 44% 56% SME Finance Urban Finance SDGs Impacted SDGs Impacted Personal Loans Two-Wheeler Finance SME Loans to Professionals and Traders (including supply chain) Home Loans and LAP Rural Business Finance SDGs Impacted Rural Group Loans and Micro Finance (JLG) Micro LAP Farmer Finance SDGs Impacted Farm Equipment Finance Agri-Allied Finance Corporate Overview Statutory Reports Financial Statements L&T Finance 197
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Sustainable Financing India is navigating a transformative course towards fulfilling its sustainable finance targets, a journey that aligns with the G20’s global objectives to foster a more sustainable and equitable future. In this national endeavour, LTF has seamlessly incorporated ESG considerations into its business and financial frameworks. This integration is not merely a response to global trends. It stands as an evidence of your Company’s long-term commitment to creating sustainable value for its stakeholders, addressing societal and environmental challenges, and contributing to the achievement of the country’s ambitious sustainability goals. LTF's Adoption of Sustainable Finance is Driven by the Following Pillars Strategic Alignment with Sustainability Risk Management and Mitigation Accessing Capital through Sustainable Finance Creating Impact through Retail Financing Commitment to Global Standards and Transparency LTF is committed to following internationally recognised guidelines, including the Green Bond Principles, Social Bond Principles, the Global Reporting Initiative (GRI) and the Task Force on Climate-Related Financial Disclosures (TCFD). This ensures its commitment to best practices and transparency in sustainable finance. LTF places its focus on financing that addresses global issues like poverty alleviation, and sustainable development. This guarantees social value, while also delivering positive financial returns for its investors. LTF taps into sustainability focused funds that yield both environmental and social returns. Through the inclusion of ESG factors in decision- making, LTF manages potential risks such as environmental degradation, social unrest, regulatory shifts, and reputational threats, reinforcing its market stability. LTF integrates sustainability principles into its business strategy to drive long-term value and address environmental and social risks. Integrated Annual Report 2024-25198
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LTF has developed a robust Sustainable Finance Framework ('SFF') to enhance its ability to support finance that promote positive social and environmental impacts, aligning with the UN SDGs. The SFF is designed to attract investment that can be classified as environmentally and socially beneficial, ensuring that each investment is backed by clear and measurable outcomes. The Sustainable Finance Framework (SFF) These pillars are informed by the best practices outlined in prominent global guidelines, including: International Capital Market Association (ICMA) Guidelines Green Bond Principles (GBP) 2021 Social Bond Principles (SBP) 2023 Sustainability Bond Guidelines (SBG) 2021 Sustainability-Linked Bond Principles (SLBP) 2023 Loan Market Association (LMA), Asia Pacific Loan Market Association (APLMA), and Loan Syndications and Trading Associations (LSTA) Guidelines Green Loan Principles (GLP) 2023 Social Loan Principles (SLP) 2023 Sustainability-Linked Loan Principles (SLLP) 2023 Climate bond initiative taxonomy serves as a crucial reference point, facilitating the identification and categorisation of eligible projects within the SFF I II III Use of Proceeds Management of Proceeds Reporting Sustainability- Linked Instruments Evaluation and Selection Process External Review The framework consists of six key pillars: Corporate Overview Statutory Reports Financial Statements 199 L&T Finance
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Second-Party Opinion LTF’s commitment to sustainable finance is further validated by a Second-Party Opinion from CRISIL, offering an independent assessment of your Company’s alignment with international standards, including the Green Bond Principles (GBP), Social Bond Principles (SBP), and the Sustainability Bond Guidelines (SBG). CRISIL’s opinion affirms your Company’s dedication to financing eligible, sustainable projects and highlights its comprehensive framework to ensure efficient allocation of resources within a 24-month timeframe. Through initiatives like clean transportation, and a strong focus on gender equality, LTF is well-positioned to fulfil its objectives. Exclusionary Criteria for Sustainable Financing LTF upholds the highest ethical standards in its investment practices. Therefore, the following sectors are deliberately excluded from sustainable financing: Unethical Practices Projects involving forced labour, child labour, wildlife trafficking, gambling, or the manufacturing of arms, tobacco, and associated industries. Environmentally Harmful Sectors Investments in hazardous chemicals, mining operations, thermal energy projects, and other sectors that cause significant environmental or societal harm. This approach reflects LTF’s broader commitment to financing projects that contribute to creating a more sustainable, equitable future for all. Each category is designed to align with your Company’s core values of sustainability, responsibility, and positive impact. This ensures that LTF’s financing supports projects that generate financial returns and make a lasting difference for both society and the environment. Shaping a Sustainable Future in FY25 At LTF, the drive for sustainable finance continues into FY25 with a disciplined approach, The organisation is firmly rooted in responsible investment and a strong commitment to fostering enduring positive change. Through quarterly reviews by its Board-level Committee, LTF affirms its dedication to transparency and accountability, ensuring that its portfolios remain consistently aligned with the ethos of sustainable finance. In addition, the internal monitoring infrastructure allows for the continuous oversight of net proceeds, guaranteeing their allocation and alignment with project objectives and ESG requirements. Partnering for Positive Change Aiming to secure ₹ 4,000 in sustainability-focused/PSL loans in FY25, LTF has raised a total of ₹ 20,480 from diverse financial institutions. This represents a significant increase from FY24, underscoring your Company’s strong commitment to driving meaningful business outcomes. LTF persistently prioritises priority sector loans, with a distinct focus on tractor financing and rural business loans, reflecting its commitment to fostering rural and agricultural growth. Integrated Annual Report 2024-25200
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Enhancing Customer Acquisition Robust financial capital enables tailored lending products for underserved segments, while strategic retailisation ensures deeper market penetration. Together, they drive customer- centric growth, strengthen inclusion, and accelerate acquisition across geographies. Sharpening Credit Underwriting Macro-prudential buffers and data- driven underwriting models enhance risk evaluation and portfolio quality. This reduces credit costs, strengthens decision-making, and ensures long- term financial stability. Implementing Futuristic Digital Architecture Strategic investments in digital infrastructure, AI, and automation build a scalable, secure, and agile ecosystem. This enables faster onboarding, seamless servicing, and future-ready lending operations. Heightened Brand Visibility Record profitability, top-tier credit ratings, and ESG- linked funding build investor confidence. Transparent governance and purpose-led growth elevate brand equity and stakeholder trust. Capability Building Sustained capital flows into digital, ESG, and people capabilities create a resilient institutional backbone. This drives agility, regulatory alignment, and readiness for tomorrow’s opportunities. Strategic Contribution of Financial Capital LTF uses its Financial Capital to achieve strategic objectives in alignment with its 5-Pillar framework. The contributions include: Corporate Overview Statutory Reports Financial Statements L&T Finance 201
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Building a Resilient and Scalable Ecosystem Manufactured and Intellectual Capital Businesses are required to build resilient and scalable operations in an increasingly digital and data- driven world. LTF believes that in an age of digital dominance, building operations that are both resilient and scalable requires more than just technology – it demands an integrated ecosystem where physical infrastructure elevates digital performance. With strategic investments in cloud infrastructure, AI/ML-powered risk analysis, automation, cybersecurity, and data intelligence, your Company is strengthening its operational framework. These investments are designed to enhance efficiency, security, and scalability while ensuring seamless service delivery across all customer touchpoints. In line with this goal, your Company’s ‘phygital’ strategy seamlessly blends digital innovation with a strong on-the-ground presence, facilitating deeper market reach—especially in rural and underserved regions. The cloud-powered infrastructure and AI-driven credit underwriting processes ensure faster, smarter decision-making, while the omnichannel approach, including the PLANET App, delivers a smooth and seamless customer journey. Complementing these digital innovations, your Company’s physical network reinforces last-mile connectivity, ensuring that services are both accessible and trustworthy across diverse customer groups. Through the integration of cutting-edge technology and a solid infrastructure, your Company is not simply responding to digital changes—it is proactively building a future-ready, scalable, and inclusive financial ecosystem. Legal and Regulatory Compliance Privacy and Data Security Innovation and Digitisation Financial Inclusion Customer Experience and Satisfaction Alignment to UN SDGs Impact on Material Issues Integrated Annual Report 2024-25202
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~2.6 Cr Customer Database 685 lakh+ Customer Servicing Experience through Digital Channels ₹ 3,800 Cr+ Digital Collections (PLANET App) ₹ 12,700 Cr+ Digital Sourcing (PLANET App) 100% Digital Disbursements (Rural + Urban) 13,000+ Distribution Touchpoints 2,297 Number of Branches PAN India (including Head Office) 100+ Cities/Towns Served ~84% of Self-Service Transactions Facilitated through PLANET App ~2 lakh Villages Served Key Achievements 07+ LTF AI Stalls at R.AI.SE Event Corporate Overview Statutory Reports Financial Statements L&T Finance 203 203
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Capitals Impacted Financial Capital Manufactured and intellectual capital contribute significantly to financial strength by driving operational efficiency, reducing costs, and fostering innovation-led revenue growth. Investments in cutting-edge technologies enhance productivity and market competitiveness, leading to higher profitability and financial stability. Natural Capital Investments in sustainable manufacturing and process innovations reduce energy consumption, optimise resource use, and minimise waste, contributing to environmental conservation. The adoption of eco-friendly technologies ensures regulatory compliance and supports long-term ecological balance. Human Capital The integration of automation, digitalisation, and advanced manufacturing processes creates opportunities for workforce upskilling and career growth, enhancing employee engagement and productivity. A technologically advanced work environment attracts skilled professionals and fosters innovation. Social & Relationship Capital A strong focus on intellectual and manufacturing capital enhances customer trust, supplier relationships, and industry collaborations, fostering long-term business partnerships and community engagement. By developing innovative solutions and maintaining high-quality standards, your Company, strengthens its market reputation. Integrated Annual Report 2024-25204
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A Phygital Approach to Driving Efficiency and Growth Your Company is advancing its operational capabilities by making targeted investments in technology and strengthening its physical presence, crafting a balanced phygital ecosystem. The integration of state- of-the-art digital solutions with a strong physical network ensures fluid customer interactions, comprehensive risk management, and deeper market penetration. Key Initiatives Driving Operational Excellence To further strengthen its operational efficiency, your Company has implemented strategic initiatives that enhance risk management, improve service quality, and streamline customer interactions. Strengthening Risk Management through Phygital Integration Your Company’s risk management framework leverages both technology-driven insights and on-ground intelligence to enhance credit decision-making and security. Multi-Bureau Credit Analysis: An in-house system that integrates external credit data from TransUnion CIBIL, CRIF Highmark, Equifax, and Experian, enabling comprehensive risk evaluation, enhanced creditworthiness assessment, and informed lending decisions. LTF’s Reporting Repository (LRR): Utilising Customer360 and Employee360 APIs, this platform identifies delinquent customers for proactive risk mitigation. Granular Exposure Controls: A structured risk management framework that tracks exposure at district and state levels, allowing dynamic adjustments in lending strategies based on localised economic conditions and borrower risk profiles. This phygital risk model ensures robust governance, fraud prevention, and credit optimisation across diverse economic environments. The synergy of advanced technological insights and an optimised operational framework strengthens decision-making processes and ensures smooth, uninterrupted service delivery at every customer interaction. Enhances risk management by lever- aging the Customer360 and Employ- ee360 APIs to identify delinquent customers and ensure proactive credit assessment. Integrates external credit bureau data from TransUnion CIBIL, CRIF High- mark, Equifax, and Experian, enabling comprehensive credit analysis and risk assessment. LTF’s Reporting Repository (LRR) Multi-Bureau Application Initiative Purpose Corporate Overview Statutory Reports Financial Statements L&T Finance 205
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Advancing Digital Capabilities for Seamless Operations To further drive efficiency, LTF continues to invest in technology- first innovations, enhancing speed, accuracy, and security in financial services. Key digital initiatives include: AI/ML-driven risk assessment, optimising underwriting and credit decision-making Cloud-based IT infrastructure, ensuring seamless scalability and security Automation-led credit underwriting, expediting loan approvals Omnichannel engagement platforms, including the PLANET App, enhancing customer experience through digital payments, collections, and service accessibility By integrating these technology- driven capabilities, your Company strengthens its competitive edge while fostering an agile, customer- first financial ecosystem. Expanding Reach through a Phygital Network Alongside its digital advancements, your Company is expanding its physical presence to enhance service accessibility and strengthen customer relationships. Fosters financial inclusion in both urban centres and underserved regions through strategic expansion Drives local job creation and stimulates economic activity in emerging markets as part of the expansion By combining digital capabilities with a strong physical network, your Company ensures a scalable, resilient, and customer-centric approach to financial services. Driving Innovation through Technology Partnerships Your Company further strengthens its phygital ecosystem by collaborating with leading technology partners. These partnerships enhance operational efficiency through: Automated credit decision- making through AI and machine learning, enhancing underwriting processes Fraud detection and KYC automation, ensuring secure transactions and regulatory compliance OCR-based document processing, enabling seamless data extraction and validation Regulatory compliance support, minimising risk and ensuring adherence to evolving legal requirements LTF has strengthened its digital lending footprint through strategic partnerships with Amazon, CRED, and PhonePe, offering a diverse suite of unsecured and secured loan products. These collaborations reflect LTF’s pivot to a customer- centric model under Lakshya 2026, enhancing credit access through agile, tech-enabled platforms. By combining its lending expertise with the digital reach of these partners, LTF is accelerating financial inclusion, simplifying loan journeys, and setting new benchmarks in responsible and seamless credit delivery across India. These partnerships picked up pace with ₹ 215 Cr disbursements in March 2025, up from ₹ 98 Cr in January 2025. By integrating technology-driven solutions into its phygital framework, your Company remains at the forefront of secure, efficient, and customer-centric financial services. Integrated Annual Report 2024-25206
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Digital Transformation: Technology driven Retail LTF’s technology driven retail strategy is shaping a unified, technology- first financial ecosystem, enabling your Company to provide seamless, secure, and tailored services to a broad customer base. By utilising AI, ML, cloud infrastructure, and automation, LTF is not just digitising financial services but scaling technology driven solutions to ensure deeper market penetration and operational efficiency. This transformation marks a strategic shift towards automation, self-service digital solutions, AI-powered risk management, and strengthened IT security. As a result, we have witnessed: ₹ 12,700 Cr+ in digital business sourcing (PLANET App), driving end-to-end process automation 1.72 Cr PLANET App downloads, indicating widespread adoption These scalable technology driven solutions have played a crucial role in advancing financial access in underserved rural markets, delivering instant, secure, and frictionless financial experiences to millions of customers. Advancing Digital Capabilities through PLANET App As the driving force behind LTF’s digital transformation, the PLANET App redefines customer interactions with financial services. It functions as an all-inclusive self-service platform, merging loan applications, payments, servicing, collections, and personalised financial offerings, thus ensuring a seamless digital experience. The PLANET App, since its launch in March 2022, has played a transformative role in shifting financial services from traditional, branch-focused models to a user- friendly, digital-first ecosystem. Leveraging AI-driven customer insights, automated loan processing, and smooth integrations with WhatsApp and chatbots, the App has streamlined the customer experience. Enhanced security protocols ensure safe digital transactions, while ongoing improvements in personalised recommendations, multilingual support, and frictionless digital journeys have deepened customer engagement and broadened access. In the past year, LTF has strengthened its digital ecosystem, ensuring that the PLANET App evolves alongside both technological advancements and the changing expectations of its customers. PLANET 2.0 introduced smoother digital journeys, enhanced security frameworks, and more seamless financial interactions. Building on this solid foundation, PLANET 3.0 takes the user experience a step further with effortless navigation, advanced risk management, and bespoke financial solutions. This continuous innovation underscores your Company’s commitment to developing a fully digitised, customer-centric ecosystem that can seamlessly adapt to future trends and challenges. Statutory Reports Financial Statements L&T Finance 207 Corporate Overview
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Key Digital Advancements in PLANET 3.0 Frictionless Digital Journeys: Optimised UI and backend processing ensure instant loan approvals, EMI payments, and document verification with near-zero intervention. Hyper-Personalisation through AI/ML: Advanced AI-driven recommendation engines analyse customer behaviour, financial history, and transaction patterns to offer personalised loan products, repayment plans, and investment opportunities. Omnichannel Expansion: Customers can now engage via chatbots, WhatsApp, multilingual IVR, and LTF’s website, reducing friction and improving service accessibility. Advanced Risk Mitigation & Fraud Prevention: Enhanced security protocols, real-time fraud detection algorithms, and AI-based risk management tools strengthen LTF’s digital ecosystem, ensuring customer transactions remain secure and compliant. 16 Lakh+ Rural Customers Served 4.5 Cr Service Resolutions Completed 685 lakh+ Servicing Experience (Customer Interactions) ₹ 3,800 Cr+ Total Collections ₹ 2,594 Cr+ Payments Collected ₹ 12,700 Cr Total Sourcing Driving Financial Inclusion and Enhancing Servicing Efficiency The PLANET App has been essential in bridging the financial divide between urban and rural India, delivering accessible, paperless, and highly personalised financial solutions. Available in 2 regional languages, it addresses the needs of a diverse customer base, including individuals from economically backward regions and aspirational districts, enabling seamless access to loans, repayments, and financial guidance, all without relying on physical branches. With 16 lakh+ users in rural areas, PLANET App has eliminated traditional barriers, equipping customers with real-time digital transactions and AI-powered financial insights. Beyond making financial services accessible, PLANET App has transformed loan servicing and collections, driving down turnaround times and operational costs significantly. The shift to digital EMI payments has minimised the need for call centre interaction, while self-service features enable customers to update mandates, download statements, and manage loans at their convenience. LTF’s AI-powered analytics and predictive servicing models further enhance efficiency by automating issue resolution and optimising response times. This integrated, data-driven approach ensures personalised support, reinforcing PLANET App’s role as a trusted financial companion in a rapidly evolving digital landscape. Integrated Annual Report 2024-25208
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Next-Gen Underwriting Platform – Project Cyclops With the goal of building a data- powered, AI-driven lending framework, your Company introduced Project Cyclops in June 2024, a next-generation credit underwriting engine designed to reshape credit risk management. Through the integration of real-time risk The Road Ahead Amid the surge in digital adoption, LTF remains focused on expanding the horizons of innovation, driving evaluation, automated credit scoring, and machine learning algorithms, Cyclops enhances the precision, efficiency, and scalability of loan approvals, significantly minimising manual involvement. Transforming Credit Risk Management with Project Cyclops AI-Powered Loan Approvals: Leveraging multi-bureau credit data, behavioural analytics, and transaction history, Cyclops accelerates and enhances Loan approvals, reducing manual intervention and processing time. Data-Rich Risk Models: The Cyclops platforms for Two- Wheeler and Farm Loans now incorporate bureau data, bank statements, geolocation, payment data, digital footprint data, satellite- based weather patterns, and even soil depth to assess creditworthiness and predict delinquencies with higher accuracy. Dynamic Risk Guardrails: Integrating real-time data, Cyclops establishes automated risk guardrails, ensuring loan approvals comply with borrower eligibility and regulatory standards. and transparency, and reducing the risk of fraud. Integration of Digital Wealth & Insurance Solutions: Elevating PLANET App to a comprehensive financial ecosystem that goes beyond lending to include savings, investment opportunities, and insurance solutions. PLANET App towards becoming a next-generation financial ecosystem. The roadmap for the future outlines: Voice & Chatbot-Enabled Financial Services: Enabling seamless real-time loan processing, customer service, and tailored financial advice through advanced virtual assistants using LLMs in the background. Predictive Analytics for Personalised Financial Planning: Using AI-based insights to offer tailored recommendations based on customer transaction history and goals. Blockchain-Based Lending Models: Employing smart contracts for efficient loan management, enhancing security Corporate Overview Statutory Reports Financial Statements L&T Finance 209
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Why KAI? Customer engagement in the financial services industry is often hindered by a range of obstacles. Delays in resolving inquiries, the absence of personalised communication, and inconsistent answers from human agents result in the forfeiture of many promising leads. Additionally, the verification of lead authenticity remains an ongoing challenge, detracting from conversion rates. To address these issues, KAI was developed as a scalable and efficient AI-driven solution that: Speeds up query resolution with instant AI-generated responses Enhances personalisation, understanding customer intent and guiding them through their journey Improves lead verification with AI-powered OTP authentication, ensuring higher-quality conversions KAI plays a critical role in filling these gaps, effectively increasing customer engagement, improving organisational efficiency, and driving more favourable business results for LTF. Geo-Intelligence for Urban Lending: The proprietary GeoGrid model enables spatial risk stratification by analysing urban building density and development activity, allowing for more informed lending decisions in metropolitan areas. Reduction in Credit Costs: Optimising risk assessment, the refined underwriting model reduces overall credit costs by directly improving portfolio quality. Satellite Database: Cyclops farm uses satellite data in addition to the other traditional sources to understand the agricultural health of Indian villages. Scalability & Expansion across Loan Products: LTF has integrated Project Cyclops across Two- 100% of Two-Wheeler loan applications are now processed through Cyclops Wheeler Loans and Farm Loans. Going forward it will be integrated in personal & SME loans. The platform provides a scalable and efficient framework for credit evaluation across diverse loan products. Gen-AI based Lifestyle Index It uses various structured and unstructured data (Images, videos) to generate a lifestyle index of the customer. Your company has filed a patent application for this innovative solution with GenAI. LTF reinforces its commitment to leveraging technology for enhanced decision-making and operational efficiency. It helps address key challenges in risk assessment and benefit through cross-selling, by empowering customers and driving financial inclusion while maintaining portfolio excellence. Additional AU/ML Implementations A CNN-powered auto attendance system verifies field staff presence using KYC image data, improving operational discipline in Micro Finance Loans and ensuring stronger on- ground governance. KAI – LTF’s AI- Powered Virtual Advisor Powered by advanced artificial intelligence, LTF’s Knowledgeable AI (KAI) serves as a dynamic virtual consultant that enhances customer engagement, optimises financial decision-making, and fosters business growth. With the integration of conversational AI and Retrieval- Augmented Generation (RAG), KAI reshapes the space of financial services, ensuring swift, smart, and customised assistance using LLM. Integrated Annual Report 2024-25210
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Key Capabilities of KAI KAI stands out as industry’s leading mortgage advisor due to its unique combination of conversational intelligence, smart automation, and financial decision-making tools. Combining automation, tailored solutions, and AI-driven decision assistance, KAI is far more than just a chatbot—it is a strategic enabler for LTF’s technology driven growth ambition. Acting as a 24/7 virtual advisor, it reduces dependency on human agents while significantly improving customer engagement. By embedding AI at the core of customer interactions, LTF continues to set the benchmark in technology driven retail innovation, providing its customers with a seamless and secure financial journey. Engages customers in human- like conversations, dynamically adapting to their needs and providing accurate responses. Retrieves relevant information from LTF’s internal knowledge base, handling both basic and complex financial queries with precision in Hindi, English or Hinglish. Features like an EMI calculator, amortisation schedules, and loan eligibility checks are embedded in KAI, helping customers to make well- informed financial decisions. The human centric design lets user asks questions in a free flow text versus restricting the users to the menu driven items which normally happen in other chatbots. Conversational AI with Agentic Capabilities Integrated Financial Tools Smart Query Handling & Automated Insights Human Centric AI Readiness @ L&T Finance LTF is proactively building an AI-first culture by equipping employees, launching internal innovations, and scaling practical use cases to drive efficiency, inclusion, and smarter decision-making across the organisation. AI Awareness & Access: Conducted tech seminars and enabled company-wide access to Gemini for AI exploration and productivity enhancement. Elevating Brand Presence In an increasingly competitive financial landscape, enhancing brand visibility is essential to positioning your Company as a leader in digital finance and technology driven retail growth. Through a combination of strategic initiatives, thought leadership, and innovative customer- first solutions, LTF has significantly enhanced its market presence, earning widespread recognition and fostering trust across diverse sectors AI Prompt Contest: Launching a 6-8 week internal contest inviting employees to submit impactful AI prompt use cases, with rewards and implementation opportunities for top ideas. AiKarma – Internal Co-Pilot: Developing a secure, offline GPT- based AI assistant to run on standard Windows PCs, with capabilities like LTF document handling and internal data fine-tuning. R.AI.SE Showcase: Hosted an AI- focused event demonstrating live use cases like KAI chatbot, Cyclops (Farm/ TW), Auto Attendance, and more— along with the launch of KAI and the Pearl Challenge. R.AI.SE 2024 – Recognising & Accelerating Innovation in Smart Enterprises As a frontrunner in digital finance, your Company has consistently pushed the boundaries of innovation, positioning itself as a leader in being a technology driven retail NBFC growth. The R.AI.SE 2024 event held in November 2024 highlighted your Company’s commitment to leveraging cutting-edge technology to deliver scalable, secure, and customer-first financial solutions. This event reinforced the brand’s innovative image and showcased tangible advancements in AI, marking a key moment in the evolution of digital finance. Corporate Overview Statutory Reports Financial Statements L&T Finance 211
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Key Highlights from R.AI.SE 2024 AI Applications in BFSI: R.AI.SE 2024 was an AI-focused initiative by LTF spotlighting real- world AI applications in the BFSI sector. The event featured specialised LTF AI stalls and masterclasses, emphasising both business and technology tracks. Launches & Innovations: Notable launches included KAI, Cyclops (Farm/TW), Cyclops Customer Journey with SNU, and the Pearl Challenge. Stalls & Demos: Engaging demonstrations like KAI, GenAI-based Lifestyle Index, Auto Attendance of employees, and Cyclops (TW & Farm) LLM based Image generation, showcased the versatility of AI in diverse financial applications, from helping business to marketing content generation. Panels & Masterclasses: Thought-provoking discussions on transforming lending using AI, optimising customer engagement, and exploring AI-first strategies highlighted the confluence of technology and financial growth. Masterclass from Google, Microsoft, Salesforce and NVIDIA for live training to participants were arranged. 1,200+ Attendees 30+ Speakers 5+ Masterclasses 15+ Demonstrations 7+ LTF AI Stalls LTF Pearl Challenge As part of our commitment to innovation-led financial inclusion, L&T Finance launched the ‘LTF Pearl Anniversary Challenge’ – a nationwide hackathon inviting AI and data science talent to develop cutting-edge models for predicting farmer incomes. By leveraging rich datasets, including weather, soil, crop yield, and commodity prices, the initiative aims to enhance credit assessments and make lending more accessible for underserved farmers. Unveiled at R.AI.SE’24, the challenge aligns with our technology driven retail Company vision under Lakshya 2026, combining technology, impact, and opportunity to unlock credit for India’s farming community. Integrated Annual Report 2024-25212
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Strengthening IT & Infrastructure In the dynamic digital age, a robust IT infrastructure is essential to ensure business resilience and scalability. As digital transformation accelerates, the imperative for secure data, seamless operations, and adaptable systems becomes more critical. To this end, your Company has actively enhanced its IT infrastructure to support its expanding clientele while proactively addressing emerging cyber threats. By emphasising scalability, security, and seamless digital workflows, LTF is reinforcing its capability to protect essential IT applications, customer data, and overall business performance. In an effort to reduce cybersecurity risks, LTF has enhanced its threat detection systems, endpoint security, and real-time surveillance across its IT environment. AI-powered risk assessment tools continuously monitor for malware, phishing attempts, and unauthorised access, ensuring swift action in response to emerging vulnerabilities. The Zero-Trust Security Model adopted by your Company strengthens data protection through multi-layered authentication, encryption, and network segmentation to prevent unauthorised intrusions. LTF has further solidified its web, mobile, and API security frameworks by integrating secure coding practices, automating vulnerability detection, and imposing stringent access controls across all digital assets. The centralised IT management system ensures the immediate rollout of necessary security patches and updates across network devices, significantly minimising exposure to the evolving space of cyber threats. In its bid to support the expansion of its digital ecosystem, LTF has strengthened its cloud infrastructure, migrating 85% of applications to Google Cloud, thus ensuring high availability, disaster recovery, and seamless system performance. This transition has optimised IT agility, reduced latency, and improved system scalability, supporting LTF’s rapid digital expansion. In tandem with these efforts, LTF is committed to building a future-ready IT workforce with high-end infrastructure support like Application Engineering Centre at Bengaluru and Integrated Tech Operations and Data Centre at Mahape, fostering a talent pool skilled in AI, data science, and cloud technologies. By integrating next-level digital capabilities, LTF ensures its IT infrastructure remains robust, secure, and perfectly aligned with its vision of a fully digital, customer-first financial ecosystem. Infrastructure Improvements for Digitisation Malware Check Vulnerability Assessments Deployment of Patches in All Network Devices Information Security Controls in the Web and Mobile Application Corporate Overview Statutory Reports Financial Statements L&T Finance 213
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Customer-Centric Digital Innovation Your Company is redefining the customer journey by utilising advanced digital tools to create an effortless, intuitive, and individualised financial experience. With the help of AI workflows, cloud infrastructure, and data analytics, your Company is not only engaging customers more deeply but also delivering services faster and with more convenience. By focussing on accessibility and inclusivity, LTF ensures that no matter where customers are, they can easily connect through multiple channels. This makes financial services more inclusive, flexible, and accessible to everyone, whether they live in the heart of the city or in more remote rural areas. Your Company has made significant strides in enhancing its loan origination and customer servicing processes to meet evolving customer needs, ensuring the experience is as efficient, transparent, and user- friendly as possible: Enhanced Customer Verification via Video KYC: To streamline onboarding and ensure secure customer verification, your Company has adopted video- based KYC, eliminating paperwork while enhancing risk management and improving customer identity verification. Digital-First Loan Application & Servicing: Your Company has optimised its loan origination and servicing process by removing physical documentation. Customers can now apply, track, and manage loans entirely online, reducing processing time and improving loan approval speed, resulting in a fully digital and transparent experience. Digital Payments Integration: As customer preferences shift towards digital solutions, your Company has expanded its digital payment options to include mobile wallets, UPI, and QR code payments. This integration enables customers to make payments easily, securely, and faster, reducing reliance on traditional cash collection systems. AI-Powered Personalisation: By utilising advanced AI-driven recommendation engines, your Company ensures customers receive tailored loan offers and repayment solutions that align with their unique financial behaviour and preferences, making the journey more relevant and enhancing customer satisfaction. Through these initiatives, your Company is making financial services faster, smarter, and more accessible, ensuring customers have control over their financial decisions—anytime, anywhere. Digital Innovation Enhancements for FY25 Servicing Franchise PLANET App Assisted Channels Cell Centres Employees/AgenciesBranches ChatbotSHO Portal WhatsApp Autonomous Channels Integrated Annual Report 2024-25214
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Entrusted with the responsibility of managing sensitive customer data, your Company places the utmost importance on the deployment of robust security frameworks to ensure the safety, confidentiality, and integrity of the information it holds. Your Company is firm in strengthening its cybersecurity protocols by utilising advanced security technologies, adhering to regulatory compliance requirements, and following a clear governance structure led by the Board-level IT Strategy Committee, the IT Steering Committee, and the Information Security Committee. This comprehensive approach ensures that security is integrated across all aspects of business operations, digital interactions, and customer services. Cybersecurity Controls To safeguard its digital ecosystem, your Company enforces a myriad of cybersecurity measures that address the risks posed by cyber threats, unauthorised access, and data breaches. Zero-Trust Security Framework: Follows a Zero-Trust model, ensuring that all users, devices, and third-party vendors undergo rigorous security validation before being granted access to systems and data. Proactive Threat Monitoring & Mitigation: Facilitates real-time cyber threat simulations, 24/7 security monitoring, and AI- powered detection mechanisms to help identify and neutralise threats before they can impact operations. End-to-End Data Encryption: Protects sensitive information through advanced encryption standards, ensuring data security both at rest and in transit. Comprehensive Patch Management: Enforces 100% security patching to prevent vulnerabilities, ensuring that all systems and applications remain updated and protected against the latest threats. Furthermore, your Company ensures readiness with a dedicated security incident response team and a Cyber Crisis Management Plan, formally approved by the Board. This structure guarantees swift action in the event of a cybersecurity incident. Business Continuity LTF has established a comprehensive IT Business Continuity and Disaster Recovery (BCP/DR) Plan, ensuring resilience against operational disruptions caused by cyber threats, natural disasters, or system failures. Redundant Infrastructure & Failover Mechanisms: Your Company has implemented geo-redundant systems to ensure uninterrupted operations and service availability. Offsite Data Backups & Recovery Protocols: Automated, encrypted offsite backups are maintained to ensure that critical data can be recovered swiftly in the event of a breach or data loss. Regular BCP Testing: Periodic disaster recovery drills are conducted to validate system resilience and ensure rapid response readiness. Certifications and Audits Your Company upholds global security standards and undergoes rigorous audits to ensure compliance with industry-best practices. ISO 27001:2013 Certification: Your Company’s Information Security Management System (ISMS) is certified under ISO 27001:2013, ensuring systematic security controls and risk mitigation. ISO 20000-1:2018 Certification: Achieved for IT Service Management, demonstrating robust IT governance and service excellence. ISO 27701 Compliance (In Progress): Your Company is working towards obtaining ISO 27701 certification for data privacy, further strengthening regulatory alignment and customer trust. Annual Security Audits: Self-assessments and third-party security reviews are conducted to evaluate internal IT controls, identify potential risks, and implement necessary security enhancements. Information Security Practices Aimed at Safeguarding Digital Assets Corporate Overview Statutory Reports Financial Statements L&T Finance 215
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Incident Management Workflow Incident Management LTF has implemented an all-encompassing Incident Management Plan to ensure the swift detection, logging, escalation, resolution, and prevention of information security incidents. This structured approach enhances response efficiency and effectively minimises security threats. Incident Identification: Security threats, vulnerabilities, or suspicious activities are detected through continuous monitoring, alerts, and user reports. Incident Logging: The identified incident is recorded in the Incident Management System, ensuring a systematic approach to tracking and resolving issues. Incident Categorisation: The incident is classified based on its nature, impact, and severity, helping determine the appropriate response strategy. Incident Prioritisation: Based on criticality, incidents are prioritised to ensure swift resolution of high-impact issues, minimising disruption. Communication/ Escalation/Bridge Call (For Major Incidents): Critical incidents are escalated through structured communication channels, ensuring timely coordination among key stakeholders. Incident Troubleshooting/ Diagnosis: Security teams analyse the incident, identify the root cause, and implement necessary fixes to contain the threat. Preventive Actions: After containment, corrective measures are implemented to prevent future recurrence of similar incidents. RCA (Root Cause Analysis): A detailed Root Cause Analysis (RCA) is conducted to understand underlying vulnerabilities and recommend long-term fixes. The incident is reviewed and monitored post-resolution to ensure effectiveness of the remediation and track any residual risks. Review/Under Observations: Integrated Annual Report 2024-25216
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Data Privacy and Security In today’s digital-first world, where financial transactions and customer interactions are increasingly dependent on technology, data privacy is a fundamental pillar of trust. As a Company handling vast volumes of sensitive customer data, your Company is committed to safeguarding personal information, ensuring compliance with global regulations, and implementing advanced security measures to mitigate risks. Your Company has instituted a detailed Data Privacy Policy that governs the lifecycle of personal data, from collection through processing, storage, and disposal, in full alignment with ISO 27001:2013 standards and evolving regulatory demands. By leveraging powerful encryption technologies, enforcing rigorous access restrictions, and maintaining round-the-clock monitoring, your Company ensures that customer data is kept confidential, secure, and protected from unauthorised access or misuse. Data Collection, Retention, and Protection LTF follows the principle of data minimisation, collecting only the necessary information required for service delivery. A well-defined data retention and disposal policy ensures that customer data is stored securely and deleted or destroyed only with managerial approval, reducing the risk of unauthorised access or breaches. Customers are encouraged to regularly update their information, ensuring accuracy and compliance with privacy regulations. To strengthen security, your Company has implemented end-to- end encryptions for all Personally Identifiable Information (PII), ensuring that data is protected both in transit and at rest. Access to sensitive data is strictly role-based, allowing only authorised personnel to view or modify customer information. Additionally, risk assessments, third- party security audits, and penetration testing are conducted periodically to proactively identify vulnerabilities and enhance the overall security framework. Incident Response and Compliance Recognising the rising threat of cyberattacks, your Company has developed a structured incident response plan to ensure rapid detection, containment, and resolution of any security incidents. Moreover, in the event of a data breach, clearly defined procedures allow for immediate action to mitigate risk and minimise the impact. Both employees and third- party vendors operate on a zero-trust access model, providing them access to customer data only on a need-to- know basis to ensure data security. Corporate Overview Statutory Reports Financial Statements L&T Finance 217
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Key Data Security Initiatives As part of its data security strategy, your Company has integrated multiple advanced security protocols across its IT systems, covering endpoints, servers, applications, and networks. Continuous monitoring, secure cloud-based operations (SaaS), and cutting- Enhanced Incident and Problem Management Incident response workflows have been optimised by linking problem tickets to security incidents, enabling faster root cause analysis and improving overall change management processes. Strengthened Release and Patch Management The scope of release management has been expanded beyond software updates to include critical infrastructure updates and security patches, ensuring cyber resilience by mitigating vulnerabilities in a systematic manner. Continuous CMDB Maintenance Automated tracking and update mechanisms for the Configuration Management Database (CMDB) have been implemented, ensuring real- time accuracy and alignment with security compliance requirements. Service Desk Ticket Segregation and Impact Assessment High-priority security issues are segregated and assigned to specialised teams for faster resolution. A structured impact assessment methodology ensures that security tickets are prioritised based on business impact. A structured data classification framework ensures that files are categorised based on security policies. DLP solutions have been integrated across endpoints and email gateways to monitor, detect, and prevent unauthorised data transfers, reducing the risk of data leaks. Data Classification and Leakage Prevention Your Company also ensures full transparency in data handling by adhering to global data protection regulations. Customers have complete control over their personal data, with the right to access, update, or withdraw consent for data collection. A formal grievance redressal mechanism has been established to address privacy concerns, ensuring timely resolution and compliance with regulatory standards. For any privacy-related requests, customers can reach out via headgro@ltfs.com. edge security technologies such as Data Classification, Data Leakage Prevention (DLP), and Cloud Access Security Broker (CASB) help safeguard sensitive information. Your Company also aims to align with ISO 27701 certification, further reinforcing its privacy management framework. Integrated Annual Report 2024-25218
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Security Awareness and Training Recognising that employees play a crucial role in cybersecurity; your Company has institutionalised a comprehensive security awareness programme. This structured approach ensures that all personnel, including Board members and senior management, are well-equipped to identify and mitigate security risks. By embedding cybersecurity awareness into organisational culture, your Company ensures that all employees contribute to strengthening data security and protecting customer information. Information Security Awareness Training Ensures all employees undergo mandatory cybersecurity training, covering topics such as phishing detection, password security, and secure data handling practices. Phishing Drill & Threat Simulations Conducts quarterly phishing drills to test employees’ ability to detect and respond to simulated cyber threats. Privacy Policy & Data Handling Training Trains employees on data protection laws, regulatory compliance, and responsible data management. Ongoing Awareness Campaigns Ensures monthly newsletters, security alerts, and best-practice updates are shared to keep employees informed about emerging threats and security protocols. Cyber Risk Management To ensure a structured approach to identifying and mitigating cyber risks, your Company conducts annual IT risk assessments, covering its infrastructure, applications, and business processes. These assessments help proactively detect vulnerabilities and strengthen the security framework. The InfoSec team plays a critical role in: Vulnerability Assessments – Ensuring systematic reviews of IT environments to detect security flaws. Configuration Compliance Reviews – Guaranteeing systems align with security best practices. Application Security Assessments – Evaluating business-critical applications to safeguard against threats. Corporate Overview Statutory Reports Financial Statements L&T Finance 219
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Cyber Insurance LTF has secured comprehensive cyber insurance coverage to mitigate financial and operational risks associated with cybersecurity incidents. This insurance serves as a critical safeguard, offering protection against: Business Disruptions Losses due to cyberattacks, system failures, and operational downtime. Legal & Regulatory Liabilities Costs arising from compliance violations, regulatory penalties, and lawsuits. Cyber Extortion & Ransomware Financial support in case of ransomware attacks or cyber extortion attempts. Damage to IT Systems Recovery costs for restoring affected infrastructure, applications, and data assets. By maintaining cyber risk insurance, LTF ensures that any potential financial exposure arising from cyber incidents is minimised, allowing for swift recovery with minimal impact on business operations. All application modifications and updates undergo stringent security testing and penetration testing before being deployed—either internally or through trusted third- party security partners. Each new release adheres to the highest security standards, ensuring that no new vulnerabilities are introduced. LTF implements a well-structured risk evaluation process, carefully assessing, prioritising, and addressing any identified threats. This thorough risk assessment process involves creating detailed, prioritised reports that outline the identified vulnerabilities, their potential impact on business operations, and recommended remediation steps. By addressing security concerns in a systematic manner, your Company ensures a robust and resilient IT infrastructure, capable of defending against evolving cyber threats. To maintain a resilient cybersecurity environment, your Company enforces a structured re-scanning and retesting process, ensuring that previously reported vulnerabilities are successfully patched and mitigated. This continuous improvement approach strengthens security measures, enhances operational efficiency, and reinforces customer trust in LTF’s commitment to data protection. Integrated Annual Report 2024-25220
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Enhancing Customer Acquisition Advanced manufacturing ensures product quality and efficiency, while intellectual capital drives innovation and data-driven insights. Together, they enable personalised solutions, strengthen brand differentiation, and accelerate customer acquisition. Sharpening Credit Underwriting AI-driven analytics and machine learning enhance risk assessment, improving credit underwriting accuracy. This reduces default risks, enhances decision-making, and ensures financial sustainability. Implementing Futuristic Digital Architecture Investments in automation, cloud computing, and AI create a scalable, secure, and agile digital ecosystem. This drives seamless customer experiences, operational efficiency, and long- term technological leadership. Heightened Brand Visibility Manufacturing excellence and innovation build brand trust, while digital strategies amplify market presence. Data- driven outreach strengthens brand positioning and competitive advantage. Capability Building Continuous investment in technology and skill upgradation ensures a future- ready workforce. Process innovation and adaptability enhance resilience and long-term competitiveness. Strategic Contribution of Manufactured and Intellectual Capital LTF uses its Manufactured and Intellectual Capital to achieve strategic objectives in alignment with its 5-Pillar framework. The contributions include: Corporate Overview Statutory Reports Financial Statements L&T Finance 221
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In today’s fast-paced business world, human capital truly defines a company’s edge over its competitors. LTF recognises that a committed, engaged and highly skilled workforce is the key to sustained success. Your Company remains firm in upholding core human values, ethical standards, and a culture of mutual respect. This value-based foundation drives your Company’s culture of learning and growth, empowering employees to constantly sharpen their skills to stay ahead of the curve. Through its strong dedication to employee engagement and cross-functional collaboration, LTF embraces diversity and inclusion, ensuring that every voice is heard. This approach empowers LTF to build a dynamic, agile workforce that can overcome complex challenges and thrive in the constantly shifting financial services space. During the year, your Company undertook a lot of initiatives for employees and will continue investing in this area. Alignment to UN SDGs Alignment to Material Issues Human Capital Development Human Rights Protection Diversity, Equity and Inclusion GRI Linkages GRI 2-7: Employees GRI 2-21: Annual Total Compensation Ratio GRI 201-3: Defined Benefit Plan Obligations and Other Retirement Plans GRI 401: Employment GRI 403: Occupational Health and Safety GRI 404: Training and Education GRI 405: Diversity and Equal Opportunity GRI 406: Non-Discrimination GRI 408: Child Labour GRI 409: Forced or Compulsory Labour Empowering Talent. Transforming Future. Human Capital Integrated Annual Report 2024-25222
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300-400 Employees/Month Recognised under Wall of Fame 100% Branches Equipped with firefighting equipment 86% Employees Rated LTF as a ‘Great Place to Work’ 8 Projects Implemented under GPTW based on employee feedback 38.5 Average Training Hours/Employee 3.5% Reduction in Attrition Through Zonal Leadership Forum (ZLF) Initiatives 173 Employees Received Long Service Awards ISO 45001:2018 Certification achieved at Head Office for workplace safety Women-Centric Policies Rolled out to support inclusion, safety, and career progression 71% Workforce employed from rural India All Active Field Level Officers Provided helmets for road safety Key Highlights 27% Female Representation In the Group Executive Committee 4.5X Increase In Women FLOs across the organisation Corporate Overview Statutory Reports Financial Statements L&T Finance 223
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Capitals Impacted Financial Capital Investing in human capital through training and well-being programmes may entail upfront costs, but these efforts yield significant long-term financial benefits. By enhancing productivity, reducing employee turnover, and fostering innovation, such investments boost profitability and pave the way for sustained financial success. Manufactured and Intellectual Capital Skilled employees are the driving force behind innovation, propelling intellectual capital and streamlining processes for greater efficiency. By fostering a culture of continuous learning and development, your Company empowers its workforce to share knowledge, navigate complex challenges, and drive breakthrough solutions. This leads to creation of competitive, agile and forward-thinking organisation in the face of constant industry evolution. Moreover, a well-trained workforce optimises the use of physical and technological assets. Employees’ expertise in digital tools and processes improves operational efficiency, reducing the need for additional infrastructure and maximising the effectiveness of existing resources. Social & Relationship Capital Human capital initiatives promote diversity, inclusivity, and employee engagement, strengthening internal relationships and enhancing your Company’s reputation. This, in turn, builds trust with external stakeholders—customers, communities, and regulators—thereby boosting social and relationship capital. Natural Capital Through sustainable initiatives like remote work, digitisation and adoption of car-pool and common transport services, human capital development indirectly aids natural capital by reducing LTF’s environmental footprint. Moreover, cultivating employee awareness of sustainability reinforces eco-friendly practices. Integrated Annual Report 2024-25224
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New Human Resource Initiatives Undertaken at LTF in FY25 In FY25, LTF launched a series of strategic initiatives aimed at strengthening its workforce and fostering a more inclusive environment. Recognising the importance of employee well-being and engagement, LTF developed the ‘Experience the C.U.R.V.E. of Happiness’ philosophy and conducted its first company-wide Great Place to Work survey, using the insights gained to implement targeted projects. Simultaneously, efforts were made to enhance capabilities through gamified training for supervisors, to ease employee commute experiences and enhance safety through the distribution of helmets and the launch of emergency ambulance services. LTF also significantly advanced its commitment to diversity and inclusion by rolling out women- centric policies and achieving a fourfold increase in women field level officers in Rural Business Finance. Initiatives like the STRIDE programme, referral programmes aimed at increasing women hires in retail and rural businesses, and a gamified DE&I eLearning module were introduced to promote equal opportunities and address unconscious biases. These efforts reflect LTF’s dedication to empowering its employees and creating a workplace where everyone can thrive. Holistic Approach to a Progressing Workplace Recognising that a robust HR strategy is essential to complement any successful business plan, your Company made ‘Capability Building’ the cornerstone of strategy, propelling its vision to become a technology driven and a premier retail NBFC. This framework is built to harmonise human resources initiatives with LTF’s larger business goals. Annual boot camps at LTF provide the opportunity to craft frameworks that enhance operational performance and foster innovation through strategic HR projects, playing a crucial role in your Company’s transformative journey. In FY25, your Company adopted a voice-driven approach to employee engagement, launching its first-ever anonymous company-wide survey, Great Place to Work (GPTW). The survey, which garnered an impressive response rate, revealed that 86% of employees consider LTF a ‘Great Place to Work’. The development of the LTF People Philosophy, ‘Experience the C.U.R.V.E. of Happiness’, is a guiding principle for all employee-centric initiatives. This philosophy underscores the commitment to holistic employee well-being and happiness, ensuring every intervention and experience is designed with this ethos in mind. This year, the Human Resources Department has taken significant steps forward by launching this framework, ensuring that every team member feels ‘Connected’, ‘Understood’, ‘Respected’, ‘Valued’, and ‘Enabled’ in their interactions. This initiative goes beyond standard workplace practices – it empowers employees by giving them the tools, resources, and support they need to succeed. Whether through collaboration, trust-building, or creating opportunities for growth, the C.U.R.V.E. initiative ensures that employees are not only thriving in their roles but also finding genuine happiness and fulfilment in their everyday experiences. Corporate Overview Statutory Reports Financial Statements L&T Finance 225
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In response to the GTPW survey conducted and the C.U.R.V.E. of Happiness Philosophy, few key initiatives were undertaken at your Company including – The C.U.R.V.E. philosophy is complemented by ‘The 5-Pillar of Human Resources Strategy’, which are designed to attract diverse talent, present employees with meaningful challenges, and foster a supportive environment. These principles provide a structured foundation, articulating the targeted outcomes of HR initiatives, ensuring the congruence of HR operations with organisational goals, and defining standards for performance and success. Eventually, by establishing a culture that encourages a ‘Digital Mindset’, your Company fosters an atmosphere that prioritises innovation and collaboration. This allows employees to embrace digital transformation as an essential element of their work. By weaving these three routes together, LTF creates a cohesive and lively workplace where individuals can thrive. This approach ultimately drives your Company’s success while fostering a culture of continuous growth and engagement. Caring Work Environment Bottom-Up Communication Impartiality Organisation-Wide Celebrations Enriched Onboarding Experience Fun and Friendly Workplace Listening Framework Co-creating policies Improving Infrastructure We Hear because We Care How Am I Doing? Structured Informal Connects 1 2 34 Integrated Annual Report 2024-25226
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Elevating Everyday Experience (Anubhav) of Employees with the C.U.R.V.E. of Happiness C U R V E Connected Understood Respected Valued Enabled Stronger Together, Always Connected Fostering authentic bonds with other employees across teams, departments and hierarchies. This connection is genuine and beyond transactions. Your Voice, Truly Heard Expressing thoughts, ideas and divergent perspectives transparently. Ensuring no fear of being judged, ridiculed, dismissed or rebutted is practised. Respect That Resonates Respecting the individual irrespective of the title/grade since everyone is contributing to the common vision. We are ONE LTF, ONE TEAM. Your Worth, Our Priority Feeling that each employee’s work is contributing to the larger organisation objective and is important. Every employee in the organisation is valuable. Empowered to Excel Ensuring employees have all the relevant tools, resources, and support to be the best version of themselves and deliver to the best of their abilities. Collaboration Trust Sense of Belonging Great Place to Work Feeling Heard Transparency Breaking Down Silos Challenging the Status Quo Inclusive Culture Active Listening Recognising Individuality Constructive Criticism Empathy Encouraging Innovation Acknowledgement of Effort Culture of Appreciation Meritocracy Celebrating Wins & Victories Development Opportunities Autonomy Clarity in Communication Tolerance of Honest Mistakes Ti g e r Tr a i n e r Ti g e r Tr a i n e r RAW Respect at Workplace Corporate Overview Statutory Reports Financial Statements L&T Finance 227
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Creating A Culture that Drives Digital Mindset ACTION REW ARDS RESULTS BELIEF Understanding Technology driven Retail Ensuring regular employee communication centred around becoming a Technology driven Retail NBFC Driving tech competitions like Hackathon (completed 3 seasons) to encourage digital thinking Enabling Technology driven Retail NBFC Recruiting IT talent to drive technology driven retail and lead digital initiatives Enhancing Organisation Memory Building people- agnostic processes: App-based geotagging for route identification for frontline staff Promoting Digitisation as a Way of Life Setting KPIs to digitise processes across levels Recognising ‘Digital Initiatives’ through Star Awards People Alignment Talent Acquisition Managing People Risk Performance and Rewards Attract and on- board diverse and quality talent. Revamped campus cadre programmes to continually feed our talent pipeline. Cultivate a culture of innovation by encouraging creative thinking and platform to share innovative ideas. Provide employees the right opportunities, not limited to only stretch assignments and cross-functional projects, but also elevating the existing roles. Foster an inclusive work environment that empowers diverse talent. Implement large- scale, continuous listening mechanisms and enhance employee engagement. Provide focused and holistic health and well- being options to our employees. Establish clear career pathways with structured learning and developmental opportunities for professional advancement. Continue reinforcing the culture of appreciation and recognition to motivate the workforce. Drive a performance- driven culture by recognising and celebrating excellence. Accentuated differentiation to drive meritocracy. Hire Right Challenge Right Support Right Nurture Right Reward Right The 5-Pillar of Human Resources Strategy Integrated Annual Report 2024-25228
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Empowering Employees through Policy Infrastructure Your Company is committed to creating a harmonious and equitable workplace where every employee feels respected, valued, and empowered. To ensure that all aspects of Human Capital management function smoothly and free from bias, LTF has established a comprehensive set of policies that promote ethical conduct, uphold human rights, and celebrate diversity and inclusion. These policies nurture a safe, supportive environment that allows employees to thrive and contribute fully. By prioritising transparency and fairness, your Company strives to cultivate a culture of respect and integrity, reinforcing its dedication to the well-being of its workforce. Central to this commitment is LTF’s Code of Conduct (CoC), which sets clear ethical standards, supported by mandatory training and annual assessments. Additionally, regular awareness campaigns keep employees informed about harassment prevention, diversity, and inclusion, while secure channels are in place for employees to voice concerns safely and confidently. Supplementing the CoC, LTF implements the following policies that emphasise its dedication to ethical practices and employee welfare: Human Rights Policy Diversity, Equity and Inclusion Policy Prevention of Sexual Harassment Policy Vigil Mechanism Remuneration Policy Health and Safety Policy Corporate Overview Statutory Reports Financial Statements L&T Finance 229
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FY25 Category Gender-Wise Age-Wise Male Female <30 Years 30-50 Years >50 Years Core Management and Senior Management 96 17 0 77 36 Middle Management 433 36 2 442 25 Junior Management 34,033 1,906 20,551 15,344 44 Total 34,562 1,959 20,553 15,863 105 FY24 Category Gender-Wise Age-Wise Male Female <30 Years 30-50 Years >50 Years Core Management and Senior Management 73 16 0 72 17 Middle Management 354 25 2 363 14 Junior Management 28,716 1,350 18,739 11,292 35 Total 29,143 1,391 18,741 11,727 66 Workforce Diversity Maintaining Diversity, Equity and Inclusion in Workforce At LTF, fostering a workplace that champions diversity, equity, and inclusion (DE&I) is fundamental to your Company’s core values. The workforce reflects a broad and diverse spectrum of individuals – varying in gender, age, ethnicity, language, and regional heritage. This diversity enhances your Company’s ability to connect with and serve its equally diverse clientele, driving innovation through a wide range of perspectives and ideas that improve business operations. By focussing its efforts on rural areas, LTF also creates valuable job opportunities for local talent, contributing to regional economic development and helping to reduce the migration of workers to urban centres. This initiative highlights LTF’s role as a force for positive change in the communities it touches. During the year, your Company accelerated its DE&I journey through structured initiatives, including the formation of a DE&I council, rollout of training modules, and focused interactions with female employees. Regular monitoring of DE&I metrics enabled measurable progress, culminating in a 4.5x increase in the female workforce in Rural Business Finance – a significant step towards gender equity. Moreover, your Company has taken up various sustainability targets to increase gender representation in your Company. Integrated Annual Report 2024-25230
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Commitment to DE&I Principles LTF is devoted to embedding DE&I principles into every aspect of its operations, ensuring these values guide everything from talent acquisition and employee retention to strategic decision-making, community outreach, and partnerships within the value chain. This commitment is brought to life through a series of initiatives, including: Aligned Work Schedules for Fairness To promote greater equity across your Company, LTF standardised its work schedules across all branches, aligning them irrespective of size or location. This included making Saturdays working days across functions, thereby ensuring parity with the field-level officers (FLOs). This step fosters a more inclusive and balanced workplace, where every employee is respected for their contribution and treated equitably. Merit-Based Culture LTF’s meritocratic approach allows fair decision-making, ensuring that employees are evaluated by their contributions and potential. This emphasis on performance and capability nurtures a diversity of ideas and fosters an environment where innovation thrives, unlocking the full potential of its workforce. Empowering Women and Underrepresented Groups Your Company is dedicated to advancing gender inclusivity and empowering underrepresented groups through strategic and impactful initiatives, including: Gender Representation & Pay Equity LTF is a strong proponent of gender inclusivity, with women making up 27% of the Group Executive Committee. In line with its broader DE&I vision, your Company has also set clear public targets to enhance female representation across levels: 18% in Senior Management, 9% in Middle & Senior Management, and 5.4% across the overall workforce. Additionally, your Company maintains equal pay for both men and women at all levels, reinforcing its commitment to upholding gender equity in the workplace. Indicators Difference between Men and Women Employees (%) FY25 FY24 Mean Gender Pay Gap -27 -60 Median Gender Pay Gap 17 -2 Mean Bonus Gap 15 13 Median Bonus Gap 9 6 Increasing Women Representation With the aim of increasing women representation in workforce, a DE&I council was instituted, comprising of senior leaders headed by CSO & CHRO and was able to increase women representation from 4.6% to 5.4% and 4.5x increase in women personnel in Rural Business Finance. The female to male compensation ratio is 1.35 due to the increase of women personnel at ground level. The team did comprehensive studies using data analysis, exit interviews, and focus group discussions to identify challenges and opportunities. Research revealed positive attributes such as an inclusive culture, ample growth prospects, and equitable treatment, alongside areas requiring attention, including flexible schedules, enhanced remote work policies, education support, and childcare facilities. In October 2024, LTF introduced initiatives like the STRIDE programme, enabling access to higher education. Additionally, customised approaches in retail and rural businesses were introduced to foster women’s participation, strengthened by a referral and reward programme to incentivise women hires. Gender Pay Gaps For details about the gender-specific remuneration benefits to employees, please refer to BRSR Section C: Principle 5. Corporate Overview Statutory Reports Financial Statements L&T Finance 231
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Winspire In FY25, your Company has taken a significant step toward fostering gender diversity and inclusion by nominating women employees for all three tracks of the Winspire Programme, an initiative established by the parent Company, L&T Limited. These tracks focus on empowering and advancing women at various stages of their professional journey: Building Growth Mindset: This track emphasises cultivating resilience, adaptability, and a mindset of continuous learning to prepare employees for future challenges. Rise: Focused on preparing women for elevated responsibilities and leadership roles, this track supports career progression within your Company. Propel: Designed to accelerate leadership development for senior- level professionals, this track empowers participants to achieve their full potential in advanced roles. 5 batches of the Winspire were conducted during the year. This initiative reflects our commitment to supporting women’s professional growth across all career levels. Voices of Women Employees “Participating in the WINSPIRE PROPEL – Leadership Journey Programme by L&T Corporate HR was a truly transformative experience. It helped me gain deeper insight into my strengths, boosted my confidence, and equipped me with practical tools to lead with purpose and clarity. The opportunity to connect with inspiring women across industries added immense value, reinforcing a strong sense of empowerment and shared growth. I now approach leadership with renewed conviction and readiness to embrace new challenges.” “The Winspire Rise – Women Leadership Programme was a truly eye-opening experience. It helped me balance career goals with personal well-being, boosted my confidence, and reshaped how I engage with others. A key takeaway was the importance of inclusive leadership—creating space for everyone to thrive. The sessions encouraged self-reflection, positive assertion, and purposeful collaboration. Connecting with like- minded women across L&T made the journey all the more enriching. Grateful for the opportunity!” Nidhi Singh Dubey Aditi Surkund Integrated Annual Report 2024-25232
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Maternity-Friendly Policies at LTF LTF has recently launched a range of progressive women-friendly policies aimed at supporting them through various life stages. For young mothers, an extended leave of up to one year has been introduced, allowing them to work from home during this period. This is in addition to childcare leave and the mandatory maternity benefits already in place. The Company has also introduced creche reimbursements for up to two children below six years of age, ensuring greater flexibility for working mothers. To enhance the comfort and safety of expecting mothers, LTF not only provides local conveyance reimbursements but also provides a child attendant during travel, ergonomically designed chairs, and, where needed, priority parking spaces for those driving their own vehicles. Supporting Motherhood at Work As a part of building a supportive workplace, LTF has announced the opening of a ‘Lactation Room’ at the Head Office dedicated to supporting nursing mothers returning to work in FY25. This room ensures privacy, while providing a hygienic environment with comfortable seating, a table, and electrical outlets for breast pumps. Additionally, a refrigerator is available for the safe storage of expressed milk. By offering this dedicated space, LTF aims to assist its female employees in balancing their professional and personal responsibilities. Cultivating a Diverse & Inclusive Culture Recognising the importance of ongoing education in shaping an inclusive culture, LTF has introduced innovative training programmes aimed at addressing biases and promoting awareness among the employees. These initiatives include: LTF’s 1st Gamified DE&I eLearning Module Diversity across Value Chain - Inclusive Partnership with Vindhya e-Infomedia LTF launched its first-ever gamified Diversity, Equity, and Inclusion (DE&I) eLearning module to help managers recognise and address unconscious biases that influence their decision-making and workplace interactions. The hands- on, scenario-based format transforms training into an engaging experience, motivating managers to actively participate rather than passively consume information. Available in 8 languages, the module was rolled out to employees under junior, middle and senior management. Through interactive workplace scenarios, participants take on the role of decision-makers, earning puzzle pieces as they navigate real-life challenges. Each puzzle piece represents a unique bias-related situation, fostering a deeper understanding of DE&I principles beyond rigid guidelines. Instead of definitive right or wrong answers, the module encourages critical thinking and reflection, ensuring meaningful learning outcomes. In recognition of LTF’s innovation in learning, your Company won the Diamond Award for learning intervention under the DE&I awareness category, recognising its impact in driving inclusivity at LTF. LTF’s partnership with Vindhya e-Infomedia has led to the employment of Persons with Disabilities (PWDs) at its Nagpur call centre. This initiative supports women and PWDs in taking their first strides into the corporate sphere, enhancing their economic independence and boosting their self-esteem. Corporate Overview Statutory Reports Financial Statements L&T Finance 233
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Managing Talent to Multiply Impact LTF considers talent management a fundamental pillar of its success. Your Company is committed to attracting skilled individuals who resonate with its core values and mission. Once they join the team, employees receive the necessary resources and opportunities to enhance their skills and progress in their careers. LTF nurtures a collaborative atmosphere where team members are encouraged to exchange ideas and support one another’s development. By emphasising clear pathways for advancement and acknowledging individual achievements, your Company not only retains top talent but also fosters a motivated workforce eager to overcome challenges and propel your Company forward. Talent management is not a one-time event; it is a continuous journey of growth. Talent Attraction Talent Attraction Talent Development Talent Deployment and Progression Talent Retention I I II III IV LTF places a strong emphasis on identifying, nurturing, and retaining top talent, ensuring that employees are equipped to grow both personally and professionally. Workforce planning is done, ensuring alignment with business priorities, transformation goals, and manpower needs. Your Company employs a dynamic recruitment strategy incorporating internal promotions, lateral hires, and campus recruitment, along with the use of external partners like Recruitment Process Outsourcings (RPOs). Special initiatives such as the ‘Aspire’ programme foster internal talent development, while diversity efforts focus on increasing representation in frontline roles. Key recruitment efforts, including the Management Trainee Programme and decentralised frontline recruitment model, ensure LTF attracts diverse, skilled talent. Your Company also emphasises pre- and post-recruitment engagement, using structured programmes like ‘Parichay’ for new joiners and ‘RAP’ for frontline staff to ensure smooth onboarding and reduce early attrition. Your Company’s approach to talent management is centred on fostering individual potential through targeted development programmes and opportunities for career advancement. By creating a merit- based environment that recognises employees for their skills and contributions, LTF’s ensures long-term success for both its employees and your Company itself. Integrated Annual Report 2024-25234
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Talent Recruitment With a keen awareness of the importance of a solid recruitment process, LTF has implemented several initiatives to enhance its talent acquisition approach, including: Category Gender-Wise Age-Wise Male Female Total <30 Years 30-50 Years >50 Years FY25 New Hires 20,799 1,176 21,975 18,047 3,922 6 New Hiring Rate 65% 70% 66% 95% 27% 9% FY24 New Hires 17,139 1,001 18,140 14,241 3,896 3 New Hiring Rate 62% 84% 63% 77% 38% 5% Note: Methodology for New Hires calculation = (No. of persons who have been hired by the entity in the FY*100)/Average no. of persons employed in the category in the FY 4 5 To streamline recruitment efforts, LTF has adopted an application tracking system. This advanced tool accelerates the hiring process, providing a seamless experience for both your Company and prospective candidates, while reinforcing your Company’s commitment to building a skilled and motivated workforce. Your Company has implemented a digital engagement strategy that provides new hires with relevant information about their roles prior to their official start date. This initiative promotes a welcoming atmosphere and prepares future employees for a smooth transition into their new workplace. LTF continues to strengthen diversity and inclusion by actively increasing women’s participation in the workforce. A focused approach is adopted – starting at the state level, then narrowing down to regions and branches suitable for women in field roles, especially in Rural Business Finance. Initiatives include creating dedicated opportunities in operations. To support this, infrastructure at selected locations has been upgraded, including CCTV installation to ensure safety, along with women-friendly policies that enable a secure, inclusive, and growth-oriented work environment. LTF has significantly improved its onboarding framework, focussing on creating a seamless and engaging experience for new hires. Both the pre-onboarding and onboarding stages have been strengthened to ensure employees feel welcomed and equipped from the outset. Application Tracking System Integration LTF has joined forces with L&T EduTech to enhance its campus recruitment process. This collaboration streamlines the selection of graduates and management trainees by employing effective evaluation mechanisms, ensuring that candidates are a perfect fit for your Company. This initiative integrates end-to-end elements, beginning with branding to attract top talent and culminating in a robust onboarding framework for campus hires. By adopting a holistic approach, the programme ensures a consistent and engaging candidate experience. A detailed and structured approach has been introduced, marking a first of its kind milestone in LTF’s campus hiring strategy. Revamped Campus Recruitment Process Digital Engagement Strategy Focus on Women Hiring and Inclusivity 2 Enhanced Onboarding Process 1 3 Corporate Overview Statutory Reports Financial Statements L&T Finance 235
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3 Talent DevelopmentII LTF’s talent development model is a strategic blend of three core themes - Experience, Exposure, and Education - structured in a ratio of initiatives and programmes under the theme, designed to nurture a dynamic and high-performing workforce. Experience Experience Exposure EducationEducation EducationExposureExperience Exposure 15% 10% 75% Employees gain leadership through new responsibilities and decision-making roles. A culture of accountability enhances involvement in key tasks. Town halls ensure transparent communication and strategy alignment. Cross-functional collaboration is encouraged through strategic working committees, enabling employees to gain diverse perspectives. Leaders in pivotal roles receive executive coaching and specialised training, sharpening their expertise and preparing them for higher responsibilities. Collaboration with prestigious educational institutions is undertaken to deliver world- class leadership development programmes, guided by industry veterans. This structured learning empowers employees with the knowledge and skills needed to lead LTF into the future. Skill Development and Learning Initiatives At LTF, the overall development of employees is a top priority, underscored by a supportive culture and robust talent management practices. Your Company offers customised functional and behavioural training programmes tailored to the specific needs identified during half yearly and annually performance reviews. These initiatives are supported by the expertise of both internal and external professionals, ensuring that the training provided is high-quality, practical, and aligned with business needs. Integrated Annual Report 2024-25236
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Average Hours of Training Particulars Year Management Non- Management Permanent Male Employees Permanent Female Employees Average Hours of Training FY25 15.07 38.56 38.64 35.28 FY24 25.09 40.59 40.90 32.47 Employee Induction Programme: Parichay The Parichay programme serves as an essential onboarding tool, guiding new recruits through LTF’s fundamental values, culture, business operations, and goals. This programme equips employees with the knowledge and skills necessary for effective role performance, followed by mandatory onboarding training modules. In FY25, all new employees participated in ESG training through this programme, with educational materials available in 8 languages. This inclusive strategy ensures that employees from diverse backgrounds can easily comprehend and connect with the training. Training Modules Key training areas covered in the Parichay programme include: Know Your Customer Operational Risk Management Code of Conduct Information Security Awareness Prevention of Sexual Harassment Sustainability/ ESG Awareness Corporate Overview Statutory Reports Financial Statements L&T Finance 237
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Role Appreciation Programme (RAP) Innovative Onboarding Experience: The Role Appreciation Programme (RAP) complements the Parichay initiative by specifically targeting frontline employees involved in the Rural Business Finance business. December 2022 Launch Date The RAP offers a unique four-day experience aimed at giving candidates (field level officers in Rural Business Finance) an in-depth understanding of their roles through immersive field visits and interactive classroom sessions. A standout aspect of RAP is its emphasis on informed consent. Candidates participate in experiential learning prior to making a commitment to LTF, ensuring mutual alignment of expectations. Udaan: Shaping Future Leaders Impacts of RAP Tangible Benefits Intangible Benefits LTF reported an increase in hiring within RAP regions, with attrition rates dropping by 19% compared to non-RAP regions. The infant attrition rate in RAP regions was just 4%, while it reached 7% in non-RAP areas. The programme facilitates cultural integration by embedding LTF’s values and mission into the onboarding process, helping new hires connect deeply with your Company’s culture. Furthermore, LTF has crafted an extensive training handbook for trainers to standardise information about Company policies and expectations. Udaan stands as LTF’s flagship initiative for welcoming new talent and shaping future leaders. The programme kicks off with an orientation conducted by HR and senior management, giving trainees a deep dive into your Company’s values, legacy and business. Depending on their roles, the programme spans from one week to a month. The initial week is dedicated to helping participants transition from campus life to the corporate setting, immersing them in LTF’s culture and exploring your Company’s evolution. Following this, trainees engage in customised technical training tailored to their specific roles. LTF supports trainees beyond the induction phase, offering continuous engagement throughout their tenure to guarantee smooth transition and success. Integrated Annual Report 2024-25238
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Aspire – Identifying Next-Gen Managers The Aspire initiative is a tailored succession programme designed for front-line sales employees, emphasising capacity building to prepare them for advanced roles. Key features of the programme include: Promotion of Upward Growth: Assessing top performers and granting them additional responsibilities Employee Participation: Employees have engaged in the Aspire Programme, with many successfully advancing within LTF 22 Management Trainees Onboarded Management Trainee (MT) Programme - Batch 2024 The journey of management trainees in ‘Sapno Ki Udaan’ commenced with an enriching week-long induction. They participated in leadership sessions designed to spark their imaginations and explore potential, while a visit to Planet L&T Experience Centre, located at L&T’s office- AMN tower (featuring interactive technologies like holographic imaging, multi-surface projection, and robot guides) fostered a sense of pride in LTF’s legacy. At Learning & Development Academy of L&T, Lonavala, they cultivated vital behavioural skills necessary for their success. The week culminated in an elegant orientation at Mumbai. Graduate Engineer Trainee (GET) Programme - Batch 2024 The graduate engineer trainees kicked off their ‘Campus-to- Corporate’ journey on July 22, 2024, at L&T’s Corporate Technology and Engineering Academy in Mumbai. This comprehensive programme encompassed leadership sessions, insightful departmental inductions, and dynamic team-building activities, ensuring a seamless transition and building a sense of community among the trainees. With the Udaan programme, LTF is proactively investing in the development of its future leaders and engineers, providing them with the skills and mindset essential for personal and professional growth within your Company. 73 Graduate Engineer Trainees Onboarded To further develop the skills of the sales team, specialised training programmes focus on both behavioural and functional competencies, resulting in the training of employees. These programmes aim to improve skills like communication, negotiation, product knowledge, that are crucial for sales success. Corporate Overview Statutory Reports Financial Statements L&T Finance 239
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Leadership Development Programme The Leadership Development Programme addresses key imperatives such as mitigating people risks, creating a succession plan for critical roles, and providing aligned career paths for leaders. The programme is structured into three phases: Inward Journey Outward Journey Phase III Phase I Phase II This phase begins with Hogan Assessments to enhance self- awareness and external behaviour evaluations through manager assessments. Participants use insights from these assessments to create Individual Development Plans (IDPs). In this phase, participants engage in workshops centred around emotional intelligence, trust building, and driving change. These workshops are designed following in-depth discussions with senior management to align with identified learning needs. The final phase reinforces key competencies through a workshop on ‘Crucial Influence’ and monthly bite-sized learning articles, ensuring continuous skill development. Furthermore, LTF offers ‘Coursera’ licenses and access to a library of certification courses to help employees develop niche skills. Your Company also continues its ‘Managerial Development Programme’, specifically designed to enhance the managerial capabilities of frontline supervisors. e-Gurukul Introducing e-Gurukul, LTF’s all- encompassing portal for training and development initiatives. This platform acts as a central resource where employees can explore a diverse array of training modules aimed at enhancing their skills and expertise. With its innovative combination of gamified simulations and bite-sized learning tools, e-Gurukul turns the learning process into an enjoyable adventure. From fundamental workplace ethics to specialised skill enhancement, each training programme is readily accessible through popular channels like WhatsApp and corporate radio. Long-Range Planning Boot Camp LTF organises a boot camp at the end of the third quarter of every financial year, aimed at preparing a roadmap for the next financial year. This boot camp is complemented by a week-long comprehensive long-range planning exercise, ensuring your Company is strategically positioned for future growth. Integrated Annual Report 2024-25240
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Hackathon LTF’s annual Hackathon is a flagship innovation platform, open to employees across all levels, locations, and business divisions. The initiative encourages creative problem-solving by enabling participants to propose solutions to pressing business challenges, thereby contributing to LTF’s growth and strategic advancement. The Hackathon promotes the adoption of advanced technologies and digital tools to enhance customer experiences, optimise sourcing, and increase cross-selling potential. Participant navigates structured process that includes nominations, expert evaluations, and leadership presentations, with winning ideas implemented into practice. Past seasons, with participants in the platform, have delved into areas like data analytics, digital enablement, and business strategy, with the latest iteration spotlighting the Sachet Awards. Gamified Learning for Frontline Staff To address high attrition rates in the Rural Business Finance, LTF developed a gamified e-learning module for branch managers, focussing on improving retention conversation skills. With a 60-65% attrition rate among frontline staff, the programme trained 1,516 managers on how to influence retention decisions and better support their teams. The module, available in multiple languages, includes simulations based on the primary causes of attrition—work pressure, better opportunities, and family time. For additional details about the trainings conducted during the year, please refer to: BRSR Section C: Principle 1, Principle 3 and Principle 5 Corporate Overview Statutory Reports Financial Statements L&T Finance 241
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Talent Deployment and Progression III By strategically deploying and advancing talent, LTF ensures that employees at all levels are empowered to reach their full potential. This approach aligns individual growth with your Company’s long-term goals. Strategic Talent Deployment: Maximising Potential Talent deployment at LTF is about more than just filling positions—it is about strategically positioning individuals within your Company to leverage their strengths. LTF views its employees, particularly those in senior roles, as integral parts of its talent pool rather than as resources allocated to specific departments. This holistic approach fosters a culture of ownership, accountability, and engagement, ensuring employees feel empowered to contribute to your Company’s overarching goals. Role Arbitrage: A Key Strategy A key element of LTF’s talent deployment is the concept of role arbitrage. This involves assigning select employees’ additional responsibilities and preparing them for leadership roles while simultaneously enhancing organisational resilience. By encouraging employees to take on diverse roles, LTF cultivates a versatile workforce ready to adapt to changing demands, aligning personal growth with organisational needs. Aligning Talent with the Strategic Vision: Lakshya 2026 Since launching its strategic plan, Lakshya 2026, in CY22, your Company intensified its focus on aligning talent deployment with long-term objectives. Senior and mid-level leaders actively participated in nationwide town halls organised to communicate these strategic goals clearly, ensuring employees across your Company understand how their roles contribute to the broader vision. The periodic addresses by the Managing Director and CEO sets expectations for key behaviours and reinforces alignment with company goals. Quarterly town halls further serve as essential touchpoints for sharing strategic insights and maintaining open communication across all levels. Talent Progression: A Commitment to Growth LTF’s performance management system integrates business growth and risk management goals, with a focus on transparency and continuous improvement. Employees’ objectives are aligned with your Company’s Long- Range Plan and Risk Scorecard, tracked through Workline HRMS to ensure clarity and buy-in. Mid-Term reviews provide feedback without performance ratings, while daily dashboards monitor progress in key roles. The annual appraisal uses a bell-curve approach to differentiate performance, linking ratings to rewards like salary increments and promotions, with bias checks ensuring fairness. The rewards system, driven by performance, includes monthly and quarterly incentives. The system has evolved from manual processes to a digital platform, with future plans to automate real-time performance tracking and further align performance with rewards. For details about the % of employees that went through a performance development and career review, please refer to BRSR Section C: Principle 3. Ascend – Internal Job Posting (IJP) LTF’s Ascend (Internal Job Policy - IJP) reinforces its commitment to internal talent development by prioritising existing employees for new opportunities across departments. Renewed in 2023, the policy introduced several key enhancements, including the removal of prior approval from supervisors to apply, a mandatory panel interview for fair selection, a 60-day transfer timeline post-selection, vertical grade movement for career progression, and safeguarding of Performance Management System (PMS) ratings after transfer. Applicable to regional positions and above in the retail function, as well as all group function roles, Ascend continues to strengthen internal mobility and leadership development within your Company. During FY25, employees were provided with new opportunities through the Ascend Policy. A Roadmap for Career Development In a significant initiative involving all departments, LTF outlined a four- year roadmap for business functions, offering employees clarity and direction in their career paths. This structured approach enhances engagement by providing a clear vision for individual growth, making it easier for employees to align their career aspirations with LTF’s long-term strategy. Integrated Annual Report 2024-25242
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Integrating Talent Deployment and Progress for Organisational Success The synergy between talent deployment and progression at LTF establishes a comprehensive management framework. By thoughtfully positioning employees in roles that optimise their contributions and promoting their continuous development, LTF builds a resilient talent pipeline vital for its future success. Talent Retention IV Aiming to strengthen employee retention and address grassroots concerns, LTF has implemented the National People Council and Zonal Leadership Forums. These councils work to promptly resolve employee issues, provide essential leadership support, and foster a sense of value among employees within your Company. The Zonal Leadership Forum (ZLF) facilitates meaningful collaboration between business zones to address challenges and reduce attrition. By focussing on key factors like employee incentives, leadership styles, and workplace conditions, it draws on the combined expertise of the Zone and Head Office. Insights are communicated to the National People Council, influencing policy design across your Company. Actionable strategies, underpinned by clear deadlines, are carefully reviewed to ensure the effective resolution of attrition challenges. Senior Frontline Elevation Programme The Senior Frontline Elevation Programme targets experienced frontline employees, offering them differentiated roles and compensation to boost retention and motivation. By focussing on long-tenured employees, the programme significantly reduces attrition and enhances productivity, with noticeable improvements across varying market conditions. Fast Track Promotion Programme for Home Loan Business The Fast Track Promotion Programme addresses high attrition in the Home Loan business by offering accelerated promotions and increased compensation to top performers. The Zonal Leadership Forum conducts extensive meetings to identify and resolve this challenge through: Strategy Sessions Engaging all zonal leaders in deep discussions to uncover root causes of attrition. Comprehensive Reviews Utilising insights from exit interviews and branch-level assessments to devise actionable solutions. These findings are set to be presented to the National People Council for prompt implementation. Category Gender-Wise Age-Wise Male Female Total <30 Years 30-50 Years >50 Years FY25 Employee Turnover Number 7,003 396 7,399 4,292 3,102 5 Employee Turnover Rate 22% 23.6% 22.1% 22.5% 21.5% 7.6% FY24 Employee Turnover Number 7,091 344 7,435 4,270 3,163 2 Employee Turnover Rate 25.5% 28.8% 25.6% 23.0% 30.5% 3.5% Note: Methodology for employee turnover rate = (No. of persons who have left the employment of the entity in the FY *100) / Average no. of persons employed in the category in the FY Only voluntary separations are considered Zonal Leadership Forum (ZLF) In addition, a new Regional Business Head structure has been created to decentralise decision-making and create an agile organisation and enhance support for employees, ensuring they have the necessary resources to excel in their roles. Exit Interviews To further understand employee turnover, LTF has enlisted an external partner to conduct exit interviews for departing employees. This initiative provides your Company with candid insights into the reasons behind employee turnover, facilitating data- driven enhancements to its retention strategies. Corporate Overview Statutory Reports Financial Statements L&T Finance 243
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Employee Grievance Redressal Mechanism LTF strives to create an open, just, and supportive work culture where each employee’s voice is heard and human rights are respected. To achieve this goal, LTF has implemented an effective grievance redressal system, providing employees with several designated channels to express their concerns. LTF is dedicated to swiftly and fairly addressing grievances, cultivating a workplace environment where every employee can thrive free from misconduct corrective and/or disciplinary action are taken and zero-tolerance is practiced. Code of Conduct Violations Employees are encouraged to report any breaches by contacting code@ ltfs.com. The Code of Conduct Committee, comprising senior officials, thoroughly examines each report to ensure that violations are addressed quickly and fairly and necessary actions are taken. Harassment Concerns For any harassment issues, employees should reach out to wecare@ltfs.com. The Internal Committee, consisting of senior leaders, is dedicated to investigating these matters promptly, ensuring that all concerns are handled with sensitivity and thoroughness to protect employee well-being. Unethical Behaviour Employees can report unethical behaviour anonymously at whistleblower@ltfs.com. The Vigil Mechanism framework ensures confidentiality and guarantees that all reports are handled with urgency and discretion. For details about the grievances and complaints received from employees, please refer to BRSR Section C: Principle 5. Integrated Annual Report 2024-25244
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Employee Remuneration and Benefits Your Company prioritises the growth and well-being of its employees through a comprehensive framework of performance management, benefits, and rewards that foster a positive workplace culture. Furthermore, over 63% of LTF’s employees are eligible for Employee State Insurance (ESI) benefits. To ensure health and well-being, LTF has partnered with a third-party provider to offer Group Mediclaim and has collaborated with Connect n Heal, a leading health-tech company. This partnership provides round-the-clock online medical services, ensuring that LTF’s employees and their families have access to the medical assistance they need. Employees can also benefit from annual health check-ups and weekly offline consultations with physicians. Employee Perks and Incentives Full-time employees at LTF enjoy a variety of benefits designed to enhance their quality of life and provide security. These include: Gratuity and Provident Fund Long-term financial security through defined contribution plans. Employee Stock Ownership Plans (ESOPs) Long-term incentives that promote ownership and investment in your Company’s success. Healthcare Coverage Comprehensive insurance options, including medical, accident, and life insurance, with flexibility for employees to include family members in the coverage. Parental Leave and Leave Encashment Leave policies that recognise the importance of family and personal time. Mediclaim Benefits Comprehensive mediclaim coverage is provided to employees, with options for parents’ coverage depending on the policy selected & employee grade. Matching Grant Scheme Additional financial incentives to support employees’ savings and investments. Corporate Overview Statutory Reports Financial Statements L&T Finance 245 245L&T Finance Corporate Overview
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Family-Friendly Policies Your Company’s commitment to supporting families is exemplified in its parental leave policies. Female employees receive maternity leave support, along with post-maternity assistance, job security, and women- friendly working norms, including a separate childcare policy, part- time working options, and leave of absence. New fathers are entitled to five days of paid paternity leave for their first two children, ensuring that both parents can participate in early family life. Additionally, all employees, regardless of gender, are eligible for parental leave under your Company policy. For details about parental leave measures, return to work rate and retention rate of employees that have taken parental leaves, please refer to BRSR Section C: Principle 3. max of ₹ 1,00,000 per child (up to 2 children) annually till their graduation. Additionally, your Company also sponsors spouses' vocational/ professional education up to graduation to enhance employability. Mandatory Leave Policy With an aim of strengthening governance practices and ensuring compliance with regulatory guidelines, a mandatory leave policy has been implemented for employees at the Business Leader ('BL') and above. This policy serves as an operational risk control measure and facilitates alignment with existing regulatory requirements. For details about well-being measures and benefits for employees, please refer to BRSR Section C: Principle 3. Workplace Infrastructure As part of its commitment to fostering a dynamic and efficient work environment, the Facilities and Channel Management team at LTF successfully executed multiple infrastructure projects spanning approximately 1.5 lakh square feet, with a robust 2,600-seat capacity in FY25. These initiatives focused on expansion, relocation, and the launch of 25 new branches across five states for the Micro Loan Against Property ('MLAP') business. Projects executed during FY25 to provide enhanced workplace infrastructure were: Ex-Gratia and Support for Families In the unfortunate event of an employee’s death, the nominee receives a one-time ex gratia payment of ₹ 2,00,000, along with the employee’s last monthly salary for 24 months. Additionally, your Company supports education of the children of the deceased with a Application Engineering Centre A dedicated workspace professionals, featuring a modern breakout area, creative zones, cabanas, and standing meeting rooms to enhance collaboration. Integrated Tech Operations & Data Science Facility A state-of-the-art facility in Navi Mumbai, accommodating over 1,300 employees from Accounts, Legal, IT and Customer Support, designed to strengthen operational efficiency. Auditorium at Mumbai Kalina Office A fully equipped 130-seater auditorium with advanced AV technology, acoustic panels, and premium amenities, providing an ideal setting for corporate events and meetings. Integrated Annual Report 2024-25246
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Employee Health and Safety At LTF, ensuring the health, safety, and well-being of employees is a fundamental priority. Your Company recognises that a sustainable and secure workplace is crucial to enhancing both productivity and employee satisfaction. These initiatives reflect a profound commitment to creating a workplace culture that prioritises the physical and mental health of its employees. Through consistent monitoring, proactive strategies, and comprehensive support systems, LTF provides a safe and nurturing environment for all. 25 Branches Covered by Hazard Identification and Risk Assessment (HIRA) 24 / 7 Emergency Ambulance Service Available PAN India for Employees and their Families 100% New Joiners (Field Roles) Trained on Road Safety as Part of Mandatory Induction ISO 45001:2018 Head Office Certified for Occupational Health & Safety with Zero Non-Conformities 53+ Specialisations Covered under the Virtual Doctor Consultation Service for Employees and Families Safety Initiatives Corporate Overview Statutory Reports Financial Statements L&T Finance 247
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LTF has implemented a comprehensive approach to workplace safety, ensuring that hazards are identified, risks are assessed, and preventive measures are deployed. Key safety initiatives include: Hazard Identification and Risk Assessment (HIRA) Conducted across LTF’s 25 branches, HIRA focusses on identifying potential hazards and implementing controls to mitigate risks. This includes training key internal stakeholders to act as master trainers who will continue educating employees on safety practices. ISO 45001 In FY25, LTF achieved a significant milestone by securing the ISO 45001:2018 certification for its Head Office in Mumbai, reinforcing its commitment to occupational health and safety. Certified by ISOQAR, this achievement highlights LTF’s structured approach to risk management, employee well-being, and regulatory compliance. Through proactive hazard identification, employee engagement, and systematic implementation, LTF has strengthened its safety culture and operational resilience. With zero non- conformities in the certification audit, this accomplishment underscores your Company’s dedication to continuous improvement. Moving forward, LTF aims to extend the certification to additional offices, further embedding global best practices in workplace safety across its operations. Road Safety Initiatives Given that a significant portion of LTF’s workforce operates in field- based roles, road safety is a priority. New hires undergo comprehensive road safety training, which includes Helmet for Frontline Employees To prioritise the safety of frontline employees, an initiative that includes distributing helmets was started. The awareness campaign features training modules in vernacular languages tailored for remote locations. As part of a comprehensive safety policy, all employees are required to wear helmets during road travel, ensuring maximum protection on the job. 100% active field level officers were benefitted with helmets under this initiative. Fire Safety and Emergency Equipment All branches are equipped with fire extinguishers and firefighting equipment, which are regularly monitored and refilled. Fire safety guidelines are consistently communicated to all employees. UVC Nanotechnology AC Systems Installed at the Head Office, these systems ensure a germ-free environment, enhancing workplace health standards. using helmets and reflectors. Your Company provides these safety essentials to ensure employees are protected while on the road. Mandatory road safety sessions are part of the induction process, helping employees understand the importance of safe travel practices. Additionally, an element of road safety was added in the daily pledge of the filed-level employees. Integrated Annual Report 2024-25248
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Emergency Ambulance Service A 24/7 PAN India ambulance service has been introduced to provide immediate medical assistance to employees and their families. Your Company sponsors this service for employees, while family members can avail of it at discounted rates. Workplace Ergonomics and Air Quality Monitoring Ergonomic chairs and furniture are provided to employees to promote good posture and reduce health risks. Regular air quality alerts and ergonomic tips are shared to ensure a healthy working environment. Health and Wellness Facilities LTF is dedicated to supporting the overall well-being of its employees through various health and wellness programmes. These initiatives are designed to provide comprehensive support for both employees and their families, fostering a sense of security and care. Virtual On-Call Doctor Employees and their immediate family members have access to doctor consultations across 53+ specialisations via the app. Annual Health Checkups and Discounts Annual health checkups are conducted, and employees receive discounts on medicines and lab services. Healthy Eating Initiative (Meal Facility) Launched for small branches of Rural Business Finance, this initiative provides employees with access to healthy and hygienic home-cooked meals. Extended to over 1,100 branches across 11 states, the facility encourages better nutrition, convenience, and social interaction among employees during meals, helping reduce reliance on fast food and promoting well-being. Emotional Well-Being Empowering employees to take care of their mental health, the Company provided free access to an app for availing emotional well-being services. Corporate Overview Statutory Reports Financial Statements L&T Finance 249
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Commute and Travel Support Recognising the importance of safe and hassle-free transportation, LTF has introduced several initiatives to facilitate employee commutes, particularly for women and field- based employees. These initiatives not only prioritise safety but also offer convenience, ensuring a smooth journey to and from work. Cab Services for Women LTF is dedicated to ensuring the safety and well-being of its female employees by providing dedicated cab services for those working late hours. This initiative guarantees a secure and dependable ride home, reinforcing your Company’s commitment to supporting its women workforce. Last Mile Connectivity To enhance the daily commute experience, LTF offer shuttle services that connect major office locations in Mumbai, with the nearest railway stations. This initiative helps employees bypass long walks and the hassle of finding alternative transport, making their journey to work much more convenient and at the same time help your Company to reduce its carbon footprint. Health and Well-Being Workshops In the whirlwind of today’s fast- paced world, prioritising health and well-being has become increasingly crucial. LTF understands the toll that achieving a healthy work-life balance can take on its employees. That’s why your Company has developed extensive health and well-being workshops aimed at addressing these challenges directly. These workshops equip participants with vital tools and strategies to manage the intricacies of modern life, highlighting the importance of not just physical health but also mental and emotional wellness. 1,100 Branches across 11 States Covered by the Healthy Meal Initiative Employee Engagement LTF emphasises creating a vibrant and engaging workplace for its employees. Recently, your Company conducted a Great Place to Work ('GPTW') survey, allowing team members to voice their opinions and insights. Following the analysis of these responses, LTF facilitated a leadership debriefing to discuss findings and create a detailed action plan, ensuring that employee concerns and aspirations are effectively addressed. LTF consistently showcases its dedication to creating a healthy, safe, and nurturing environment for its employees, prioritising their physical, mental, and emotional well-being in every initiative. For additional details about health and safety trainings, please refer to BRSR Section C: Principle 3. Integrated Annual Report 2024-25250
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Approach LTF follows a structured annual plan for employee engagement, meticulously crafted at the start of each financial year. This plan is developed in alignment with organisational goals and executed collaboratively by the HR team, which includes zonal and regional representatives. Identification of Need for Employee Engagement Activities Designing Employee Engagement Calendar Post Thorough Deliberation Discussion with Stakeholders (Leadership, and HR Partners) Finalisation of Employee Engagement Calendar Launch of Employee Engagement Calendar Execution and Results Employee Feedback 1 2 3 4 5 6 7 Your Company fosters employee engagement by embedding its core values of Pride, Ambition, Discipline, and Integrity into all aspects of the workplace. Leaders drive this culture through a multi-channel communication strategy that includes townhalls, podcasts, and digital platforms, ensuring organisation- wide awareness and alignment. Senior Management conducts quarterly and regional townhalls to review progress, address challenges, and share strategic goals. Open discussions like Lakshya dialogues allow the Managing Director and Chief Executive Officer to share insights on strategic priorities and your Company’s vision. Leadership forums, including zone-specific and national councils, and regular branch visits by the leaders address people-related challenges, fast-track decisions, and align initiatives with organisational goals. Clearly defined KPIs, along with mid-term reviews and regular discussions, ensure clarity and alignment to effectively manage employee performance. Great Place to Work In FY25, LTF adopted a more strategic, voice-led engagement approach, marked by its first company-wide anonymous survey under the Great Place to Work framework in 12 vernacular languages. With a 73% response rate and 86% of employees affirming LTF as a great workplace, the organisation earned GPTW certification in its first attempt. Survey insights were shared through scorecards, followed by an action-planning workshop, leading to 8 key projects now driven by business teams with regular MD&CEO plus Senior Management check- ins – reinforcing LTF’s commitment to listening, acting, and creating an inclusive culture. Some key interventions developed based on the GPTW Survey include: GPTW-Inspired Initiatives to Build a Culture Your Company has rolled out 8 key initiatives to foster a vibrant, inclusive, and engaging workplace. ‘Fun and Friendly Workplace’ promotes a lively culture through monthly and organisation-wide celebrations, while ‘Enriched Onboarding Experience’ ensures smooth integration for new joiners via paperless processes and dedicated onboarding days. ‘Improving Infra’ enhances physical Corporate Overview Statutory Reports Financial Statements L&T Finance 251
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workspaces with modern amenities, safety measures, and comfort upgrades across locations. ‘We Hear Because We Care’ and the ‘Listening Framework’ establish a culture of active listening through surveys, discussions, and co-created policies. ‘How Am I Doing?’ brings transparency and accountability with employee feedback-driven policy updates and live Regional Head scorecards. Additionally, training for BLs and OLs builds leadership capabilities for effective engagement, and ‘One-on-One Informal Connects’ foster trust and rapport through regular, personal interactions. STRIDE Launched in October 2024, the STRIDE (Skilling and Training for Rounded Individuals Development and Enhancement) aims to empower employees by offering a personalised approach to continuous learning, encouraging self-driven growth. It provides employees with the flexibility to pursue courses, certifications, and degree programmes aligned with their professional roles or long-term career aspirations. Digitising Performance Tracking Following insights from the GPTW survey in FY25, LTF identified the need to automate performance tracking for greater transparency and real-time access. A digital scorecard was piloted for sales managers across all lines of business, enabling automated data capture, dashboarding, and peer benchmarking. The platform also integrates with mid-term review, annual appraisals, and R&R programmes. Upon successful rollout and testing, this solution will be extended to all roles, driving a more data-driven, transparent performance culture. IdeaXpress Launched in FY25, the IdeaXpress initiative was designed to drive transformative ideas by encouraging employees to propose solutions that improve business operations. This initiative aligns with LTF’s ‘Listening Framework’, ensuring that employee feedback is heard and acted upon. The programme promotes bottom-up communication, fosters a culture of innovation, and offers recognition for impactful ideas. The process involves problem identification, idea validation, management review, and implementation, with quarterly champions being recognised for their contributions. CREW 2 Programme Rooted in insights from the GPTW survey, the CREW 2 programme was launched to strengthen core behaviours – Collaboration, Respect, Empowerment, and Win-Win outcomes. Backed by a signed Programme Charter from key stakeholders, this one-day workshop was focused on translating feedback into meaningful action. Its success will be measured through improvements in managerial scorecards in future surveys, reinforcing LTF’s commitment to continuous learning and a values- driven culture. Integrated Annual Report 2024-25252
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Sports and Wellness Details Stepathon (FY24) Stepathon 2.0 (FY25) Participants 670 2,046 Teams 67 209 Regions 1 7 Locations 1 166 Total Step Count 27.6 Cr 58.8 Cr Total Distance Covered 1.9 lakh kms 4.1 lakh kms Number of Winners 38 146 Stepathon 2.0 LTF’s commitment to employee wellness is reflected through initiatives like Stepathon 2.0, a 60-day walking challenge that encourages an active lifestyle while enhancing connections among employees. LTF Employees Ride the Royal Enfield Experience Teaming up with Royal Enfield, LTF engaged its employees in a host of lively brand activation activities, including puzzle making, painting bike fuel tanks and t-shirts, and showcasing the newly launched Royal Enfield bike. This collaboration also provided exclusive advantages to L&T Finance employees, such as special discounts on merchandise and complimentary vehicle servicing, boosting team morale and strengthening brand ties. L&T Sea Bridge Marathon A contingent of employees, led by senior executives, including the MD & CEO, CFO, and COO, participated in the marathon at Atal Setu in Mumbai, promoting fitness and teamwork. LTF Got Talent The LTF Got Talent initiative was a brilliant showcase of employee Competitions and Participation creativity, offering a unique platform for individuals to reveal their hidden talents. Participants submitted videos featuring talents like singing and dancing to instrumental performances and stand-up comedy. The standout talent, determined by popular votes, had the honour of performing for the champions of the illustrious ‘Champions League’, making memories to last a lifetime. A select group of 12 exceptional talents were chosen to represent LTF, highlighting your Company’s Corporate Overview Statutory Reports Financial Statements L&T Finance 253
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QuizWiz This year, the L&T Group hosted the 3rd season of its QuizWiz competition, a unique knowledge- based challenge. For the first time, LTF participated in this exciting event, with an impressive turnout of 376 participants forming 188 teams. The competition was conducted in a ‘phygital’ format, blending physical and digital elements to ensure a seamless and inclusive experience. Independence Day - Let’s Make News A creative contest saw teams craft artworks representing India using newspapers. Winning entries were recognised with prizes at regional levels. Festive Celebrations Major festivals like Diwali, Holi, Christmas, Onam, and Ganesh Chaturthi were celebrated with enthusiasm, featuring contests and traditional decorations. Highlights include the Eco-friendly Ganesha contest and Best Flower Rangoli awards, which recognised employees’ creativity and cultural pride. ArtBeat Debuting in the L&T Group’s ArtBeat competition, employees had their artworks shortlisted and showcased at the prestigious exhibition. Your Company showcased exceptional talent and enthusiasm throughout the contest. Its journey culminated in a proud moment at the grand finale, where the team from LTF emerged as the 2nd runners- up, securing a spot among the top performers of the L&T Group. Cultural and Festive Celebrations commitment to honouring the diverse skills of its team. LTF Photography Contest During the year, your Company launched the LTF Photography Contest, themed ‘India Through My Lens’. This initiative inspired employees to express their creativity and capture the essence of the nation’s diverse culture. Participants submitted photographs in four categories: Nature & Landscape, Wildlife, Culture, and Archaeology, fostering a strong sense of community and appreciation for India’s rich heritage. Integrated Annual Report 2024-25254
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Celebrating 30 Years of LTF FY25 also marked a significant milestone in LTF’s journey as it celebrated 30 years of building impact with purpose. The anniversary was marked by a series of commemorative activities across locations, fostering a sense of unity, and belonging among employees. The 30-year milestone served as a platform to honour the people and values that have shaped LTF’s journey, while also inspiring employees to be part of the next chapter of transformation. Leadership engagements during the celebrations further reinforced your Company’s commitment to its workforce, deepening emotional connection and collective purpose across all locations. Corporate Overview Statutory Reports Financial Statements L&T Finance 255 Corporate Overview 255L&T Finance
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Community and Social Impact Hafta Challenge Launched during the Joy of Giving Week, this initiative encouraged acts of kindness, such as writing thank- you notes, helping those in need, and connecting with nature, fostering empathy and social responsibility. With a workforce of over 25,000 employees spread across 2,000+ meeting centres, decentralised plans ensure inclusivity and engagement for rural employees. Initiatives include: Localised Engagement for Rural Workforce One Team One Lakshya Employees across India left handprints on a canvas, symbolising unity and collective commitment to organisational goals. BM Connect Programme Aimed at strengthening employee engagement at the branch level, the BM Connect Programme fosters closer connections and open communication between employees and leadership, ensuring alignment with organisational goals and values. Cultural Celebrations Regional events like Lohri, Bihu, Pongal, Rajo Festival and Mango and Lychee Days add local flavour to engagement. Wellness Awareness Doctor-led video sessions on seasonal health precautions in regional languages. Integrated Annual Report 2024-25256
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At LTF, recognising and celebrating employee achievements is not just a practice; it is a core value that energises your Company’s workforce. In FY25, your Company continued its commitment to excellence with recognition initiatives designed to honour those who make extraordinary contributions. Long Service Award LTF introduced the Long Service Awards to honour employees who have dedicated a significant portion of their careers to your Company. During the year, 173 Awardees with a tenure milestone of 10+, 15+ and 20+ years with LTF were felicitated, celebrating their loyalty and commitment to your Company over the years. Recognition and Awards In FY25, Your Company acknowledged the profound impact of employees who have been integral to LTF’s success and growth over the years, reinforcing the value placed on long-term dedication and commitment. The celebration included performances by People with Disabilities PwD) – visually impaired, hearing impaired and locomotor disability to drive inclusion and spark a conversation on diversity. STAR Awards The Star Awards is the flagship recognition programme at LTF, celebrating employees who go above and beyond their duties to achieve success in areas where others may not have dared to venture. to ensure merit-based recognition. Winners are felicitated in person by the Board of Directors, with a personalised letter from the MD & CEO sent to their family members. The ceremony is broadcast live across your Company, complemented by a cultural programme, ‘Meri Awaaz Suno’, adding a special touch to the celebration. Wall of Fame The Wall of Fame honours employees who demonstrate extreme ownership, commitment, and dedication to delivering outstanding results. This recognition initiative acknowledges individuals whose performance aligns with your Company’s quarterly and monthly business priorities. Each month, around 300-400 employees are selected for their exceptional contributions, with recognition taking place through a structured process involving Skip Level Managers, Business Heads, and Chief Executives, depending on the employee’s role and level. Winners receive certificates of appreciation and a monetary reward, further reinforcing LTF’s dedication to acknowledging excellence in performance. This monthly recognition continues to play a significant role in encouraging outstanding performance and motivating employees across your Company. To institutionalise this recognition, employees receive distinct coloured lanyards corresponding to their years of service. This visual acknowledgment celebrates individual achievements and promotes a culture of commitment within your Company. Through the Long Service Award, LTF honours the hard work of its employees, fostering a sense of belonging and motivation across the workforce. This award recognises individuals who demonstrate exceptional performance and commitment, contributing to the overall success of your Company in a truly remarkable way. The award is open to the non- frontline cadre, including Frontline Supervisors, Frontline Managers, and Organisational Leaders. Employees can nominate themselves, peers, subordinates, or managers across a variety of categories. The comprehensive and stringent selection process is involved in various stages of assessment by business leaders, Corporate Overview Statutory Reports Financial Statements L&T Finance 257
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HR Digitisation In alignment with its Technology driven Retail NBFC ambition, LTF recognises that digitisation is not just a trend but a necessity in today’s rapidly evolving business landscape. Embracing a digital mindset fosters agility, innovation, and transparency, enabling your Company to respond effectively to the dynamic needs of its workforce and clients. By leveraging technology, your Company enhances operational efficiency, improves communication, and empowers employees to take charge of their professional journeys. Recent advancements include the introduction of a Flexi Time System in select metro cities, enabling employees to adopt more flexible work schedules. This initiative, supported by digital tools, reflects your Company’s commitment to work-life balance. Additionally, your Company has established a Quality Management System ('QMS') forum where employees raise queries, complaints, and issues. For easy accessibility, chatbots and service tickets are available to streamline the process. For frontline employees, the onboarding process has been systemised to accommodate the large volumes of new hires seamlessly. Additionally, background verification checks, which were previously manual, have been digitised, ensuring faster and more reliable verification. Overall, these developments have led to the end-to-end digitisation of the employee lifecycle at LTF, significantly enhancing operational efficiency and improving the employee experience. To strengthen governance, including during recruitment, LTF has implemented a robust Pre-Offer Background Verification process in collaboration with the external platform TRST Score. This three-step verification checks the PAN Card, along with a combination of the PAN Card, UAN, and Aadhar card, allowing for thorough employment history checks relevant to the applied job role. This makes LTF a pioneer in the NBFC sector by adopting such a comprehensive approach. Integrated Annual Report 2024-25258
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Enhancing Customer Acquisition Trains sales members in effective communication and customer relationship management Community page/ radio podcast on market trends help for better customer understanding Sharpening Credit Underwriting Educates staff on financial analysis and risk assessment techniques Encourages collaboration between sales and credit teams for better information exchange Invests hours in ongoing education for employees to keep up with industry regulations Implementing Futuristic Digital Architecture A dedicated team for researching and adopting cutting-edge digital technologies established End-to-end HR processes digitised Conducts technology workshops to upskill employees and embrace digital transformation Heightened Brand Visibility Empowers employees to be brand ambassadors through consistent messaging Motivates staff to engage in community events and social media to boost visibility Invests in marketing and communication training for relevant teams Capability Building Institutes training programmes at every phase of employee lifecycle Upholds a culture of continuous learning through workshops Conducts continuous performance and career development reviews Covers 100% employees under mandatory module training Strategic Contribution of Human Capital LTF utilises its human capital to fulfil a range of business objectives, guided by your Company’s 5-Pillar framework designed to establish a sustainable and predictable retail franchise. Central to these goals are effective communication, collaboration, and a strong emphasis on employee development. The specifics are outlined below: Corporate Overview Statutory Reports Financial Statements L&T Finance 259
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Fostering Trust. Strengthening Relationships. Social and Relationship Capital Strong partnerships and stakeholder trust contribute to sustainable long- term financing and value creation. LTF emphasises the importance of strong partnerships and meaningful engagements with stakeholders as key drivers of long-term success. Its commitment extends beyond financial solutions to fostering trust, collaboration, and shared growth with stakeholders. By actively engaging with customers, investors, employees, regulators, value chain partners and communities, LTF creates sustainable value and drives positive impact. Through strategic alliances, transparent communication, and responsible practices, your Company strengthens connections that fuel progress and resilience in an evolving financial landscape. Alignment to UN SDGs Alignment to Material Issues Customer Experience and Satisfaction Financial Inclusion Human Rights Protection Community Development Corporate Governance and Ethics GRI Linkages GRI 201: Economic Performance 2016 GRI 202: Market Presence 2016 GRI 203: Indirect Economic Impacts 2016 GRI 205: Anti-corruption 2016 GRI 413: Local Communities 2016 GRI 416: Customer Health and Safety 2016 GRI 417: Marketing and Labelling 2016 GRI 418: Customer Privacy 2016 Integrated Annual Report 2024-25260
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₹ 30 Cr Total CSR Spend 1,110 Active Digital Sakhis 2.40 lakh+ Beneficiaries Linked to Social Schemes 16.90 lakh+ CSR Beneficiaries ~61.06 lakh+ Number of Women Borrowers 10,500 Supported Women Entrepreneurs ISO 26000:2010 Social Responsibility Certificate of Conformance ₹ 26.18 Cr Spend Over and Above the CSR Obligation 54 Overall Net Promoter Score (NPS) ₹ 180 Cr Worth of Social Welfare Schemes Infused Key Highlights 57% Repeat Women Borrowers Corporate Overview Statutory Reports Financial Statements L&T Finance 261 261
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Capitals Impacted Financial Capital LTF’s strong stakeholder relationships contribute to financial stability by enhancing investor confidence, facilitating access to capital, and improving risk management. Engaged customers and trust- driven partnerships lead to higher business volumes and sustainable revenue streams. Maintaining these relationships requires consistent investment in customer engagement, governance, and social impact. Manufactured and Intellectual Capital LTF’s strong stakeholder relationships drive the adoption of its financial solutions and digital platforms, reinforcing its Manufactured and Intellectual Capital. Customer trust encourages the use of digital financial services, while collaborations with technology firms and financial institutions foster innovation and operational efficiency. Ensuring that new technologies meet customer needs requires continuous engagement. Human Capital Investing in Social and Relationship Capital helps to create a stable, trust-driven ecosystem that benefits the workforce. Strong customer and investor relationships drive business growth, enabling better career opportunities and employee development. Community initiatives, such as financial literacy and digital inclusion, expand the future talent pool, while ethical partnerships promote a responsible work culture. Sustaining these benefits requires continuous alignment between external stakeholder engagement and internal workforce growth. Natural Capital LTF’s stakeholder engagement extends to environmental sustainability through initiatives like water conservation, afforestation, and sustainable financing. Strong stakeholder relationships enable the adoption of responsible lending practices, sustainable supply chain initiatives, and climate-conscious financial solutions. These efforts promote responsible practices while strengthening community ties and enhancing your Company’s ESG alignment. Integrated Annual Report 2024-25262
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Customer Centricity - Empowering Experiences, Building Trust Strong relationships are built on trust, consistency, and value. This principle underscores LTF’s firm commitment to customer centricity in an era of evolving customer expectations. By prioritising customers at the core of every strategic and operational decision, your Company fulfils and foresees the evolving financial aspirations of its clientele. Through bespoke and innovative solutions, LTF nurtures trust, enhances satisfaction across diverse customer segments, and propels long-term growth and enduring relationships. Innovative Offerings to Empower Customers In FY25, your Company furthered its commitment to excellence by introducing innovative solutions that resonate with the evolving needs of its customers like Home Décor finance. Various offerings are designed to widen access to finance while uplifting rural and underprivileged communities on their journey towards financial empowerment. The proposed acquisition offers several strategic advantages: Accelerating scale-up by 36 months by adding a high- quality, RoA-accretive franchise at a compelling valuation Enabling seamless integration with a ~₹ 1,000 Cr loan book, ₹ 337 Cr net worth, ~1lakh active customers, ~700 employees, and ~130 branches Including a 24x7 centralised operations and security centre for real-time branch monitoring Expanding presence in underpenetrated gold loan markets across North and West India Strengthening the long-term strategy with no EPS dilution Loan Against Gold Jewellery Your Company’s approach to inorganic growth is guided by three key considerations: addressing a critical capability gap, ensuring an easily integrable business model and people profile, and securing opportunities at attractive valuations. In this context, LTF identified a strategic opportunity in the gold loan segment that aligns well with its inorganic growth philosophy. Your Company announced the proposed acquisition of the gold loan business undertaking of Paul Merchants Finance Pvt. Ltd., on a slump sale basis. With one of the largest rural franchises in the country, comprising ~1.6 Cr rural customers and a cumulative gold loan outstanding of ₹ 15,000+ Cr*, gold loans represent a natural and strategic extension of your Company’s product suite. LTF’s rural workforce of over 20,000 feet-on-street is expected to act as a force multiplier in generating gold loan leads from within the existing customer base. Additionally, all new Micro LAP branches (80+) established in the FY25 are equipped to handle gold loan operations. Human Touch in Rural Engagement In rural areas, where digital adoption remains sluggish, your Company dismantles barriers through deeply impactful, human- centric engagement. By employing vernacular communication attuned to regional dialects and cultural subtleties, LTF ensures that every interaction resonates deeply, making financial services both accessible and relevant. The strategy hinges on a dual framework: an expanding network of physical branches complemented *As per credit bureau data Corporate Overview Statutory Reports Financial Statements L&T Finance 263
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by local representatives who serve as trusted confidants, offering personalised guidance at every step of the financial journey. This robust on-ground presence strengthens customer relationships and drives socioeconomic growth by creating employment opportunities within the communities it serves. Digital Transformation - Connecting with Customers Anytime, Anywhere As digital transformation takes precedence, your Company embraces advanced technologies to create seamless, personalised, and efficient customer engagements. By integrating Artificial Intelligence (AI), Machine Learning (ML), and automation, your Company strengthens its digital capabilities while preserving the integrity of human-assisted interactions, ensuring a consistent and superior service quality throughout. Central to this transformation is the PLANET App which underwent significant upgrades in FY25. The integration of WhatsApp facilitates instant, real-time support, while AI-driven insights offer customised financial recommendations tailored to individual needs. By supporting 12 regional languages, the App bridges linguistic divides, making financial empowerment accessible to urban and rural customers and encouraging self-reliance in managing their finances. The newly introduced Customer Interface Platform Datamart offers a comprehensive, 360-degree perspective on customer interactions and preferences. This integrated system enables service representatives to curate exceptionally personalised experiences based on in-depth customer insights and historical data. Moreover, by incorporating AI-powered chatbots and real-time agent support, the platform creates a seamless, responsive support ecosystem. This strategic combination ensures swift query resolution and precise information delivery, whether through automated digital channels or human representatives equipped with AI-powered insights. This transformation reflects your Company’s commitment to providing not just financial products but a holistic, intuitive experience that engages customers anytime, anywhere. 100% 4.5 1.72 Cr PLANET App Downloads Rural Group Loans and Micro Finance Sourcing Done by Employees through the Mobile Application PLANET App Rating on Google Play Store In FY25, your Company refined its NPS methodology to assess sentiment across multiple touchpoints, with special attention given to crucial interactions such as loan applications, disbursements, and post-service support. The framework was customised for each product line, featuring specialised assessment criteria, including: Efficiency and transparency in the loan disbursement process Clarity of product terms and communication Customer Satisfaction - Driving Continuous Improvement At LTF, the value of customer feedback is central to improving satisfaction and building loyalty. By methodically tracking Net Promoter Score (NPS) and deriving insights from the Voice of Customer (VOC) programme, your Company understands customer sentiments and turns them into actionable steps to improve customer experience. Integrated Annual Report 2024-25264
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54 NPS Score (as of March 31, 2025) Responsiveness and expertise of customer support Overall service experience Customer satisfaction remains a top priority for your Company, as reflected in its commitment to swift and decisive engagement with customers. This approach has delivered impressive results, including the PLANET App, where customer- led enhancements contributed to achieving a ₹ 2,594 Cr collections. Furthermore, insights derived from an extensive nationwide survey have empowered your Company’s digital transformation, enabling the seamless delivery of services such as instant eligibility assessments and paperless processing, significantly enhancing customer interactions. Customer Grievance and Resolution Driven by a commitment to delivering unparalleled customer service, your Company’s Grievance Redressal Policy fosters a well-structured and transparent approach to resolving customer concerns. The system operates through a three-tier grievance mechanism, supported by a clear escalation matrix, ensuring timely and effective issue resolution across various digital and physical channels. Customers can easily raise concerns through branch visits, emails, calls, website submissions, or the PLANET App, ensuring a unified and seamless experience. With the offerings of these digital platforms like the PLANET App, query resolution has become more seamless, significantly reducing the need for customers to visit physical branches. The grievance resolution process is further enhanced by cutting- edge technology and data-driven insights. A dedicated Centralised Customer Service Team (CCST) oversees the entire complaint- handling process, ensuring swift and accurate resolutions. In FY25, LTF made significant strides in its Customer Service framework to enhance grievance resolution and reduce recurring issues. Key measures included: Implemented automated settlement NOC and ensured timely updates to CIBIL records after settlement closure, significantly reducing customer- related complaints through immediate and accurate credit reporting. Streamlined processes for first- time customers to register mobile numbers with TRAI, addressing SMS and call-related grievances. Corporate Overview Statutory Reports Financial Statements L&T Finance 265
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In addition to these efforts, in FY25, your Company undertook a special initiative by training the Customer Service team on issues of cybersecurity & safety through an external expert, keeping in mind the importance of customers data & privacy. Moreover, the employees are regularly trained on the regulatory requirements, including cybersecurity and safety. Your Company has also integrated an award-based assessment system to further strengthen the training and awareness framework. In addition, the IO also conducted trainings to improve the effectiveness of customer grievance redressal system. Internal Ombudsman Governance Structure in Customer Servicing LTF has designated an Internal Ombudsman (IO), an independent authority responsible for reviewing customer complaints that are fully or partially rejected, in line with RBI directives. The IO plays an essential role in promoting fairness and transparency in the grievance redressal process, impartially evaluating the complaints referred for review. In FY25, the IO assessed cases with solid factual evidence that corroborated your Company’s decisions, and, when necessary, examined additional documentation or information to ensure effective resolution of customer grievances. In cases where the IO’s decisions differed from the initial resolution, their recommendations were incorporated to arrive at outcomes focused on the customer. This synergistic process improved decision- making and enhanced customer confidence. Enhanced digital payment processes, leading to a significant decline in complaints. A thorough analysis of recurring complaints, using advanced data analytics to identify trends and implement corrective measures, forms the foundation of your Company’s strategy. A robust feedback mechanism ensures that grievance data is consistently monitored, providing actionable insights that are shared across teams for continuous improvement. Internal reviews and quarterly grievance updates presented to the Board reinforce transparency and accountability. By refining service processes and incorporating customer feedback into system upgrades, your Company has significantly reduced grievance volumes, while maintaining focus on delivering exceptional customer experiences. For detailed insights into grievance resolution and customer satisfaction initiatives, please refer to BRSR Section C: Principle 8 To access the policy, please refer to the 'Policy Compendium' section. 39% Year-on-Year Grievance Reduction (FY25 vs. FY24) Integrated Annual Report 2024-25266
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Key Achievements in FY25 Low Complaint Rate Over the past 10 months, your Company maintained an average of just 0.11 complaints per 1,000 customers, reflecting strong service quality and proactive issue resolution. Regulatory Compliance Achieved 100% adherence to the regulatory Turnaround Time (TAT) since April 2024, ensuring prompt grievance redressal. Regular training sessions are conducted to further enhance the grievance resolution framework, equipping teams with the skills necessary to address customer concerns more efficiently. The IO attends all the meetings of the Board-level Committee responsible for customer protection and servicing issues, providing quarterly updates on grievance trends and resolutions. This governance structure ensures continuous oversight, reinforcing your Company’s commitment to delivering exceptional customer service and safeguarding customer interests. Consumer Protection Committee Chaired by an Independent Director, the Board-level Consumer Protection Committee meets quarterly to review key customer service metrics. These metrics encompass complaint counts, compliance with agreed Turnaround Times (TATs) across various categories and products, and the identification of top complaint drivers. The Committee’s priority is to resolve chronic issues and implement corrective measures that foster sustained improvements in service quality. Moreover, IO also briefs the Committee individually and the feedback from the Committee members is incorporated in the grievance redressal mechanism to enhance customer service experience. Customer Service Committee In FY25, your Company’s internal Customer Service Committee ('CSC') remained focused on enhancing the customer experience and driving superior service delivery. The CSC, is chaired by the Managing Director and Chief Executive Officer, with contributions from the Chief Executives, Business Heads, and Functional Heads, which meet regularly (generally, at least monthly). The CSC has played a critical role in ingraining a customer-first culture across your Company. By fostering collaboration and driving strategic initiatives, the Committee works to streamline internal processes, resolve systemic issues, and keep pace with the expectations of its customer base. Monthly review meetings enable the team to monitor service progress, track ongoing projects, and execute actions designed to improve service quality. In FY25, the CSC prioritised advancing digital service channels, refining grievance management systems, and expanding efforts to strengthen customer satisfaction. It was instrumental in scaling the Net Promoter Score (NPS) initiative, gathering real-time insights to it to capture real-time insights and drive actionable improvements. The CSC also provided strategic oversight for projects that targeted grievance resolution efficiency and reducing service friction. With its strategic direction and a firm commitment to accountability, the CSC ensures that your Company remains agile and responsive to customer needs. By continuously enhancing service excellence, the Committee reinforces your Company’s leadership in delivering customer-centric solutions that set new industry benchmarks. Corporate Overview Statutory Reports Financial Statements L&T Finance 267
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Safety of Customer Information - Protecting Trust Your Company employs Secure File Transfer Protocols (SFTP) and conducts regular InfoSec audits to ensure the safeguarding of customer data, particularly in collaborations with external partners. Also, in alignment with RBI’s outsourcing norms & guidelines, various steps have been undertaken for data protection. These rigorous practices are regularly monitored and updated to mitigate emerging risks, further solidifying your Company’s commitment to data security. In FY25 No complaints were received regarding breaches of customer privacy from customers, outside parties, or regulators. A comprehensive data privacy framework ensured full compliance with industry regulations, effectively preventing data leaks and ensuring responsible management of sensitive information. At the core of your Company’s data privacy ethos lies transparency. By providing customers with clear, detailed information on how their data is utilised, your Company fosters an environment of trust and security. The value proposition of its products is communicated in a transparent manner, perfectly aligning with customer expectations. Customer Outreach - Enhancing Financial Inclusion LTF’s business activities are in full alignment with India’s vision of achieving financial literacy and inclusion under the National Strategy for Financial Inclusion 2019-2024. Your Company is committed to expanding and sustaining financial access, working collaboratively with stakeholders across the financial landscape to drive this mission forward. In its dedication to inclusive development, LTF prioritises equipping customers with the Your Company ensures that its frontline employees receive comprehensive training designed to deliver superior service, upholding your Company’s values and ensuring the protection of customer privacy. This continual training reinforces the importance of adhering to privacy policies and delivering clear, honest communication to customers. knowledge and resources needed to make sound financial choices. Regularly conducted financial literacy workshops, easily digestible product guides, and educational content on the PLANET App support customers in understanding essential financial concepts and making well-informed borrowing decisions. Furthermore, the App enhances these initiatives by providing practical financial management tools, ensuring customers can apply their financial insights with confidence and precision. By adhering to global safety standards, your Company protects its customers data and sets new benchmarks for secure and ethical practices across the industry. Omni-Channel Customer Engagement LTF is dedicated to creating a comprehensive omni-channel customer ecosystem, providing a seamless platform for customer engagement. The objective is to offer customers multiple avenues to connect with your Company—be it through digital, phone-based, or face-to-face interactions—ensuring a unified and integrated experience. This approach empowers your Company to anticipate and address customer needs and expectations at every point of contact, enhancing satisfaction and trust. In addition to conventional engagement methods, your Company seamlessly integrates cutting-edge digital analytics through advanced tracking and monitoring systems across every customer touchpoint. These analytical tools capture and analyse customer behaviour, preferences, and interaction data from a range of sources—website visits, mobile app usage, call centre interactions, Integrated Annual Report 2024-25268
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Fostering Financial Inclusion LTF’s inclusive growth strategy is anchored in a firm commitment to investing in underserved communities, integrating them into the mainstream economy. Your Company strives to elevate the quality of life in these areas by extending access to financial services. Through purposeful efforts focused on financial inclusion, your Company ensures that individuals and families in underserved regions gain access to the resources and tools needed for financial autonomy. This commitment transcends the provision of products, as LTF is also fostering long-term economic opportunities and supporting the empowerment of local communities. and in-person meetings. By leveraging these insights, your Company expertly guides customers through their digital journey, offering personalised recommendations, targeted messaging, and automated responses to ensure each engagement is both efficient and bespoke. Moreover, these insights are embedded across sourcing, underwriting, and collections, utilising automated data collection and real-time monitoring dashboards to streamline the customer experience at every stage. Branches Employees and Agencies Email Call Centre PLANET App WhatsApp Services Chatbot Self Help Portal Modes of Engagement 61.06 lakh+ Women Borrowers 60% Women Repeat Borrowers Corporate Overview Statutory Reports Financial Statements L&T Finance 269
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Empowering Customers through Education and Awareness LTF is committed to equipping customers with the knowledge and resources to make informed financial decisions. Robust systems have been implemented to ensure consistent access to accurate and comprehensive information. The customer awareness training module on your Company’s website offers guidance on key financial topics such as interest rate models, risk gradation, schedules of charges, Prime Lending Rates (PLR), the Ombudsman scheme, and the process for returning property documents in the event of a borrower’s demise. These efforts are part of LTF’s broader commitment to building a financially informed customer base, fostering inclusion, and enhancing financial security. By reinforcing awareness at every step of the customer journey, the Company continues to drive responsible financial behaviour and empowerment at scale. In FY25, LTF expanded its customer education initiatives through a multi-pronged strategy: Social media campaigns focused on cyber safety, financial literacy, road safety, health, and environmental conservation, using digital platforms to broaden awareness and reach Dynamic branch displays, centrally controlled and regularly updated, provided timely fraud alerts and educational content at physical customer touchpoints Vernacular content was introduced to ensure inclusivity for customers in rural and linguistically diverse regions WhatsApp emerged as a key communication channel, offering higher engagement and wider penetration than traditional SMS methods for delivering educational material Digital analytics and customer feedback were leveraged to refine and personalise content, ensuring relevance and continuous improvement in outreach efforts Integrated Annual Report 2024-25270
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Customer Testimonials Housing Loan Farmer Loan Two-Wheeler Loan Micro LAP (Loan Against Property) “Choosing L&T Finance for our home loan was one of the best decisions we made. The entire process was smooth and transparent—from quick approvals to competitive interest rates. The team was always available to support us, making our home-buying journey truly stress-free. Settling into our new home at L&T Emerald, with its great location and amenities, has been a dream come true.” “L&T Finance has been my trusted partner since 2014. Over the years, I’ve been able to finance two tractors and vital farm equipment through their support. Their crop-cycle-based repayment model and the PLANET App for EMI tracking make financial management simple and convenient. They truly understand a farmer’s needs.” “Owning a superbike had always been a dream, and L&T Finance turned that into a reality. The entire loan journey was digital and paperless, with quick disbursal and no hidden surprises. I truly appreciate the transparency and hassle-free experience. Trustworthy and efficient—that’s L&T Finance.” “I run a small dairy business alongside farming. When I needed financing, most lenders offered high-interest rates. L&T Finance offered me a competitive loan after a quick home inspection and property evaluation. The entire process was clear and quick, and the funds helped me grow my business with confidence.” Amit Chaturvedi, Mumbai, Maharashtra Moiz Manasawala, Mumbai Mr. Palraj, Chennai, Tamil NaduSatish, Beri, Hisar, Haryana Corporate Overview Statutory Reports Financial Statements L&T Finance 271271L&T Finance Corporate Overview Financial Statements Statutory Reports
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Strengthening Value Chain Partnerships for Sustainable Growth LTF ensures business sustainability beyond its own operations by fostering responsible practices across its entire value chain. LTF believes that Value Chain engagement is vital for fostering sustainable business practices. By collaborating closely with lenders, suppliers, vendor partners (including DSA & Dealers), companies can ensure highest ethical standards, environmental responsibility, and social impact across their value chain. Effective engagement enhances transparency, drives innovation, and strengthens relationships for mutual benefit. Developed in FY22, LTF has a publicly available Third-Party Code of Conduct to promote ESG awareness across its value chain. The Code of Conduct is applicable to vendors, borrowers, goods and service providers, and persons holding business relationships with your Company. It mentions their commitment towards the prevention of significant risks associated with incidents of child labour and forced or compulsory labour, among others. Your Company fosters an environment for its value chain partners, providing support and guidance on ESG considerations. This facilitates the value chain partners’ incorporation of the ESG parameters into their business and operations. Dedicated to embedding ESG practices in its operations, LTF had conducted an ESG assessment in FY23 with a few of its Facilities and Channel Management and IT vendors. In FY25, like the previous year, LTF conducted an exhaustive ESG Value Chain Assessment for >75% of upstream and downstream value chain partners by value (purchase/sales). This proactive measure aligns with the regulatory guidelines, and demonstrates LTF’s commitment to sustainable business practices. The responses from the survey were analysed to draw insights and understand the ESG maturity of the value chain partners. By evaluating the entire value chain, LTF aims to enhance transparency and mitigate risks. Below are the interim findings of the ESG value chain assessment study. Value Chain Engagement To promote Human Rights among its Value Chain, specific questions on human rights were also covered in the ESG Assessment. Integrated Annual Report 2024-25272
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Environment Social Governance Policies and Standards Policies and StandardsPolicies and Standards KPIs KPIs KPIs 73% of companies have a human rights policy 47% of companies have an anti harassment and non-discrimination policy 60% of companies have a diversity and inclusion policy in place 80% companies have whistleblower protection policy 100% companies have Code of Conduct outlining your Company's values, principles, and guidelines 100% of companies have Business Continuity Plan 87% of companies have a cybersecurity policy in place 93% of companies have a formal environment policy 53% of companies have a climate change policy. Few companies from the financial sector have a climate change policy 53% of companies have one or more ISO certifications 73% of companies monitors spending on measures towards well-being of your employees and workers 80% of companies (all except 1) extend benefits like health insurance, accident insurance, maternity leave and paternity leave available for employees and workers 93% of companies track the gross wages paid to females 93% track the number of POSH complaints 60% of companies have a process in place for recording employee feedback 73% of companies track the jobs created in smaller towns 73% of companies track the amount of input material (raw material) directly sourced from MSMEs within India 20% companies track the total sales to dealers/distributors 20% companies maintain a record of the top 10 dealers/distributors to whom sales are made 47% companies track the number of purchases with related parties 40% companies track the sales to related parties 53% companies track the loans and advancements given to related parties 67% companies track the investments made in related parties 87% companies ensure the protection and privacy of customer data 93% of companies monitor total energy consumption. Only 67% have renewable energy sources 47% companies monitor water discharge, by destination and by levels of treatment 90% quantify GHG emissions (Scope 1 and 2). Financial services and utilities companies were observed to monitor GHG emissions 67% monitor the plastic waste generated and 80% monitor the e-waste generated Corporate Overview Statutory Reports Financial Statements L&T Finance 273
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Driving Purpose, Empowering Communities LTF champions the essence of inclusive growth, embracing the compelling philosophy that “The purpose of business is not just to create wealth but to actively work towards the upliftment of society.” Your Company’s CSR initiatives are thoughtfully designed to align with the United Nations Sustainable Development Goals (SDGs), demonstrating a profound commitment to advancing a sustainable and inclusive global vision. LTF actively supports key global and local objectives in the sectors of digital and financial inclusion, climate impact management, disaster management and social inclusion. Your Company’s CSR-focused areas are thoughtfully aligned with its business objectives and digital transformation journey, reflecting a commitment to sustainable and inclusive growth. By utilising its expertise in financial ecosystem, LTF fosters digital and financial inclusion. This enables underserved communities to participate in the evolving rural economy. In alignment with its firm commitment to inclusive progress, LTF has strategically included climate impact management within its CSR agenda, focussing its efforts on addressing climate change. These efforts include ambitious goals such as achieving horticulture plantation, ensuring water positivity, and strengthening rural livelihoods of farming communities. This integrated approach ensures that environmental sustainability efforts contribute In a world driven by progress, the real question is, how do we ensure no one is left behind? directly to economic empowerment and community development. Through disaster management, LTF applies its operational strengths to build resilience in vulnerable regions. Social inclusion includes two-wheeler road safety initiatives for youth, basic health and primary care services, and targeted skill development programmes in banking and finance sector to bridge gaps in employability. These focused efforts echo LTF’s broader vision of fostering safer, more inclusive, and empowered communities. Financial and digital transformation of the communities and creating sustainable livelihood opportunities. We strive to revitalise and create sustainable livelihood and financial ecosystem of and for farmers, rural women and youth. MissionVision Corporate Social Responsibility Integrated Annual Report 2024-25274
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CSR Approach Your Company’s CSR approach is grounded in the core principles of inclusive growth and sustainability. It drives impactful change through a comprehensive ‘3S Strategy’: Social Impact, Scale and Sustainability. The CSR initiatives are designed with a clear purpose - to create meaningful, positive change in the communities it serves. By prioritising measurable outcomes, LTF ensures that the programmes align with its values and actively contribute to a more equitable and thriving society. The reach of your Company’s CSR initiatives goes beyond numbers. Its focus lies in amplifying impact through strategic resource allocation, robust stakeholder engagement, and meticulous impact measurement. This approach ensures that its interventions are comprehensive, sustainable, and capable of effecting long- term transformation across diverse communities. Sustainability drives every decision your Company makes, ensuring that the positive outcomes of the initiatives continue to resonate for generations to come. It is also ensured that the programmes deliver long-term impact, and foster self- sufficient communities. Social Impact Scale Sustainability Corporate Overview Statutory Reports Financial Statements L&T Finance 275
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Digital and Financial Inclusion Climate Impact Management Disaster Management Social Inclusion Empowering Minds, Bridging Divides Mitigating Impacts For a Resilient, Eco-Friendly Future Rising above Adversity, Building Resilience in Unity Nurturing a Better Tomorrow 1 3 2 4 CSR Thrust Areas Promoting sustainability through horticultural plantations and water resource management, ensuring environmental conservation and improving local livelihoods. Empowering rural women with digital and financial literacy, enabling them to become agents of change in their communities. Providing timely relief and building resilience in disaster- affected areas, ensuring that communities recover and rebuild effectively. Conducting road safety campaigns and healthcare initiatives, addressing key public health and safety challenges across India. Alignment with SDGs Integrated Annual Report 2024-25276
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Initiatives Conducted under Each Focus Area across States Reach 60+ lakh Touched 28 Districts 13 States 3,200+ Villages Digital and Financial Inclusion Climate Impact Management Disaster Management Social Inclusion Disclaimer: This map is a generalised illustration only for the ease of the reader to understand the locations and is not intended to be used for reference purposes. The representation of political boundaries and the names of geographical features/States do not necessarily reflect the actual position. The Company or any of its Directors, officers or employees cannot be held responsible for any misuse or misinterpretation of any information or design thereof. Corporate Overview Statutory Reports Financial Statements L&T Finance 277
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In line with the Indian government’s Digital India vision, LTF’s Digital and Financial Inclusion efforts aim to empower underserved communities. These efforts address both the gender gap and the rural-urban digital divide. Despite significant strides in digital and financial inclusion across the country, challenges persist in rural areas where access to digital platforms and financial services remains limited, particularly for women. By focussing on empowering Digital Sakhis, rural women entrepreneurs and community members, LTF’s initiatives contribute to the government’s vision of a cashless economy and promote financial inclusion across underserved communities. By enhancing financial literacy and digital skills, LTF helps bridge the urban-rural gap and foster gender equality. In doing so, your Company enables women to play an active role in India’s digital transformation. It ensures they are not only included in the evolving financial landscape but also positioned as key drivers of sustainable growth in their communities. Digital and Financial Inclusion 1 2 3 4 Digital Sakhi Expansion (FY25) 1 5 Existing State 6 10 States Districts Kushinagar Gorakhpur Uttar Pradesh Rajasamand UdaipurChittorgarh Rajasthan Tumkur Bidar Kolar Gulbarga Karnataka Madurai Tamil Nadu Kottayam Alleppey Kerala MurshidabadWest Bengal Saharsa Supaul Bihar States Districts Districts Integrated Annual Report 2024-25278
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Your Company has launched the ‘Digital Sakhi’ Programme as a transformative flagship initiative. It aims to address the persistent challenges of digital and financial literacy in rural India. Launched in FY18, the programme empowers women to become agents of change within their communities by providing them with comprehensive training in digital and financial tools, leadership, and entrepreneurship. Optimising Training for Greater ImpactExpanding Reach & Accessibility Initially operational in 3 states, spanning 8 districts and 300 villages, the initiative now reaches 10 states, 25 districts, and more than 2,800 villages. This substantial growth has been made possible by a uniform replication model, which supports swift scaling, while safeguarding the quality of training and ensuring relevance to local needs. The Digital Sakhi 2.0 training framework is designed to elevate financial literacy through an enhanced 8-module curriculum, replacing the former 4-module structure, tailored to the evolving needs of the communities. The duration of sessions have been refined to 90 minutes for group trainings and 45 minutes for personalised consultations, Evolution of Digital Sakhi 2.0 In FY25, Digital Sakhi 2.0 emerged from the Digital Sakhi Programme, broadening its reach, updation of digital and financial literacy modules, special campaigns on prevention of cyber frauds, entrepreneurship programme for women collectives, use of digital monitoring tools, and stakeholder engagement workshops, among others. Key new elements in Digital Sakhi 2.0 include: addressing critical topics like income, savings, borrowing, digital transactions and investments. Newly introduced modules focus on smartphone proficiency, fraud mitigation, and the management of microenterprises, integrating real-life case studies to ensure pragmatic, hands-on learning. Digital Sakhi 2.0 Programme Corporate Overview Statutory Reports Financial Statements L&T Finance 279
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Fostering Collaborative Partnerships The initiative has embraced strategic collaborations to magnify its reach and efficacy. Partnerships with regulatory and financial institutions such as the NABARD, RUDSETI, and NGOs like SELCO have enhanced the programme’s ability to deliver comprehensive financial inclusion services. These alliances ensure optimal resource utilisation, simultaneously fostering opportunities for beneficiaries to tap into government schemes and financial products. Enhancing Economic Independence through Skill Development In addition to enhancing financial literacy, Digital Sakhi 2.0 has integrated skill-building initiatives to empower women in establishing sustainable livelihoods. Initiatives like Drone Didi and RUDSETI provide participants with specialised expertise, empowering them to launch micro-enterprises and contribute to household income. Deepening Support for Women Entrepreneurs A structured framework has been developed to support women entrepreneurs beyond traditional capacity-building training. The programme now provides 4 years of continuous mentorship, business profiling, gap analysis, and financial assistance through seed capital. Additionally, women entrepreneurs receive guidance on formalising their businesses through registrations such as Udyog Aadhaar and FSSAI licenses. Regular income tracking and participation in business plan competitions further encourage long- term business success. Strengthening Impact Measurement To ensure a quantifiable and outcome-driven impact, Digital Sakhi 2.0 has integrated advanced monitoring tools. Newly introduced empowerment indicators carefully track key metrics, including household savings, digital financial adoption, and business growth. Tailored mobile applications facilitate long-term behavioural analysis, ensuring that financial literacy leads to tangible economic progress for beneficiaries. Leveraging Technology for Efficiency The initiative has transitioned from manual record-keeping to a holistic, cutting-edge digital ecosystem. A bespoke mobile and web-based application now optimises the delivery of training and precise tracking of progress. A live project dashboard, developed with Microsoft Power BI, offers real-time data insights, while CSR software enhances transparency, enriches data analytics, and improves strategic decision-making for the LTF CSR team. Integrated Annual Report 2024-25280
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Engaging Stakeholders More Effectively The stakeholder engagement framework has been significantly strengthened under Digital Sakhi 2.0. Government officials, financial institutions, and local bodies now play a central role in the initiative’s operations. Community Advisory Panels (CAPs) have been introduced to ensure independent feedback and greater participation from local leaders, which enhances the programme’s grassroots impact. Strengthening Communication & Awareness A comprehensive and strategic communication approach has been developed to enhance outreach and foster greater awareness. Regular updates are disseminated through platforms like social media, newsletters, podcasts, and All India Radio broadcasts, increasing the programme’s visibility. Additionally, over 3 lakh physical financial planning workbooks have been distributed, and more than 4,000 community wall paintings with financial literacy messages have been installed to strengthen foundational lessons. Expanding the Reach and Impact in FY25 In FY25, the programme expanded its geographical footprint, launching initiatives in Chittorgarh, Rajsamand Key Achievements during the Year - New Geographies Key Achievements during the Year - Existing Geographies 3 states Expansion into New Geographies: Rajasthan, Bihar and Uttar Pradesh 6 States Existing Geographies 3.30 lakh+ Communities Sensitised on Digital and Financial Literacy 10.90 lakh+ Communities Sensitised on Digital and Financial Literacy 300 Digital Sakhis Onboarded in New Geographies 810 Digital Sakhis ₹ 12 Cr+ Worth of Social Welfare Schemes Infused ₹ 168 Cr+ Worth of Social Welfare Schemes Infused 3,000 Women Entrepreneurs Equipped with Entrepreneurship Development Programme (EDP) 7,500 Women Entrepreneurs Equipped with Entrepreneurship Development Programme (EDP) and Udaipur (Rajasthan), Saharsa (Bihar), and Kushinagar (Uttar Pradesh), while strengthening its presence in Karnataka, Kerala, Tamil Nadu, Bihar and Uttar Pradesh and West Bengal. The decision to expand was based on comprehensive baseline studies, which highlighted the need for interventions to address significant gaps in financial and digital literacy, particularly among women. In line with its commitment to advancing digitalisation, LTF invested in providing tablets to the Digital Sakhis, streamlining the on-ground data collection process. Additionally, training sessions were conducted to equip the Digital Sakhis with the skills needed to effectively use the tablets and related applications, reinforcing your Company’s focus on enhancing digital capabilities. Corporate Overview Statutory Reports Financial Statements L&T Finance 281
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Case Study In Kolar, South Karnataka, a remarkable transformation is taking place as three of our Digital Sakhis rise to prominence. Our Digital Sakhis - Chaithra, Nagaveni, and Gayathri are redefining the role of women in rural development through adoption of technology under the Indian Government’s Sashakt Nari - Viksit Bharat Programme - NaMo Drone Didis. Before their involvement in the Digital Sakhi programme, Chaithra, Nagaveni, and Gayathri faced significant economic challenges due to limited job opportunities. Their lives changed when they joined the Digital Sakhi programme, which aimed to enhance digital and financial literacy and provide The Story of the Digital Drone Didis Empowering Women through Technology and Financial Literacy entrepreneurship trainings for rural women. This initiative laid the groundwork for their eventual participation in the NaMo Drone Didi programme. Motivated by the confidence instilled by the Digital Sakhi programme, the three Digital Sakhis enrolled themselves in intensive training sessions at the National Institute of Plant Health Management and the TSCAB Cooperative Training Institute in Hyderabad and earned their remote pilot certificates. After the training, the Digital Sakhis established a network with local farmers for providing essential agricultural services such as crop monitoring and fertiliser spraying, which significantly improved farming efficiency, leading to an increased productivity and income. Collectively, they earned up to ₹ 7.3 lakh in a year, enabling them to better support their families in repaying debts and meet ends. They have now planned to upscale the quality of drones and make this technology available to larger sections of the farmers in their surrounding communities. The journey of Chaithra, Nagaveni, and Gayathri as Digital Drone Didis is a testament to the potential of women-driven initiatives like Digital Sakhi. Integrated Annual Report 2024-25282
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Social Impact Assessment Findings Snapshot of Social Impact Assessment (SIA) – West Bengal – Digital Sakhi Snapshot of Social Impact Assessment (SIA) – Odisha – Digital Sakhi Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 Baseline 2018 2,500 22 0 54 2,000 0 0 1,700 1,000 21 14 0 7 17 5,000 0 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 Assessment 2023 5,000 100 92 100 3,500 91 84 3,200 3,500 86 100 100 99 81 14,000 88 Increase in Income (Avg. Monthly Income in ₹) Adoption of Digital Payment modes (%) Increase in Savings (%) Bank Accounts (%) Avg. Savings of WEs (in ₹) Increase in Business (%) Increase in Customer Base (%) Avg. salary of workers working with WEs (in ₹) Savings through the Programme (in ₹) Knowledge of government schemes (%) Participation in Financial Decisions (%) Savings Plan (%) Maintenance of Accounts (%) Increase in Savings (%) Increase in Income (in ₹) Increase in customer base (%) Project Period: FY 2019-23 Agency: CRISIL Digital Sakhi(s) Digital Sakhi(s) Community Member(s) Community Member(s) Women Entrepreneur(s) Women Entrepreneur(s) Respondents having bank account: 33% (Baseline) v/s 97% (Assessment) Respondents having bank account: 54% (Baseline) v/s 90% (Assessment) Respondents having awareness of digital modes of payment: 6% (Baseline) v/s 91% (Assessment) Respondents having awareness of digital modes of payment: 39% (Baseline) v/s 71% (Assessment) Respondents having awareness of social schemes: 29% (Baseline) v/s 97% (Assessment) Respondents having awareness of social schemes: 21% (Baseline) v/s 86% (Assessment) Corporate Overview Statutory Reports Financial Statements 283L&T Finance Corporate Overview Financial Statements Statutory Reports
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Disaster Relief Activities Disaster Management 1 2 3 4 With the escalating impact of climate change, natural disasters are becoming increasingly frequent and intense, affecting millions globally, especially in India. Floods, cyclones, and other extreme weather events are causing widespread devastation. They are intensifying human suffering and leaving families without shelter, food, or the means to rebuild their lives. The urgency of providing support in such moments cannot be overstated, as these disasters not only disrupt lives but also often rob individuals of their hope and stability. In response to the increasing frequency and intensity of natural disasters, LTF has recognised the urgent need to enhance its disaster relief and recovery efforts. In FY25, to understand the scale of the escalating needs, your Company has redirected its resources to ensure that communities in distress were not left to face these challenges alone. LTF emphasised swift and effective intervention, including conducting expedient assessments of impacted areas and providing immediate relief kits. In response to the devastating floods in Bihar, Telangana, and Uttar Pradesh in FY25, LTF quickly mobilised teams to provide immediate relief. Your Company distributed essential relief kits directly to the flood-affected families. 1,33,000 Beneficiaries 1,10,000 Bihar 17,000 Telangana 6,000 Uttar Pradesh Integrated Annual Report 2024-25284
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Climate Impact Management 1 2 3 4 Project Prakruti As the global impact of climate change continues to intensify, the need for comprehensive Climate Impact Management has never been more critical. Rising temperatures, erratic weather patterns, and the depletion of natural resources are threatening ecosystems, biodiversity, and the livelihoods of millions, particularly in rural communities. LTF recognises that addressing these environmental challenges is key to ensuring a sustainable and resilient future. Your Company’s focus on Climate Impact Management is driven by a deep commitment to protecting the environment and supporting rural economies. LTF tackles climate change through practical initiatives focused on water management, agroforestry, and horticulture. By equipping farmers with sustainable farming practices, your Company improves livelihoods and promotes ecological regeneration. These projects help enhance soil health, conserve water, protect local biodiversity. They also build climate resilience in rural communities while fostering long-term sustainability and economic growth. Project Prakruti is your Company’s flagship environmental conservation initiative aimed at revitalising degraded lands through large- scale horticulture and miyawaki plantation. By focussing on eco-restoration and biodiversity enhancement, the project supports sustainable livelihoods for local farming communities. It also promotes the expansion of green cover in areas affected by deforestation and soil degradation. Outcomes FY25 Under Project Prakruti, 1 lakh+ horticulture plantation comprising species like Pomegranate (68,750), Mango (14,050), Mahogany (7,515), Coconut (3,170), Guava (2,600), Lemon (2,315) and Teak (1,600) were successfully planted in over 250 acres of land in Pavagada Taluk, Tumkur district, Karnataka. The project laid emphasis on increasing the participation of women farmers. The technical support for promoting sustainable horticulture practices was sought from local Krishi Vigyan Kendras (KVK). Corporate Overview Statutory Reports Financial Statements L&T Finance 285
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Key Achievements during the Year 1,00,000+ Saplings Planted across Pavagada Taluk, Tumkur District, Karnataka 100+ Farmers Benefitted Economically Through Horticulture- Based Income Generation 250+ Acres Land Brought Under Horticulture Plantation >90% Survival Rate Achieved for Horticulture Plantation Before After Pavagada, Karnataka Integrated Annual Report 2024-25286
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Key Achievements During the Year Expanding its Reach to Kolar, Karnataka 0.40 lakh KL Water Harvesting Capacity Achieved Across Project Areas 480+ Acres Supported with Sustainable Water Management Practices 20+ Water User Groups (WUGs) Trained in Water Resource Management and Conflict Resolution 5,000+ Farmers Directly Benefitted in Kolar, Karnataka 50+ Water Structures Constructed and Maintained in 12 Villages >90% Survival Rate Jalvaibhav 2.0 Jalvaibhav 2.0 builds upon the success of LTF’s original Integrated Water Resource Management (IWRM) programme, which has already made significant strides in addressing water scarcity and improving sustainability in drought-prone areas. The expansion of Jalvaibhav 2.0 reflects the growing need for comprehensive water management solutions in new, geographically diverse regions facing increasing challenges related to water availability and climate change. By extending its efforts to these new areas, the project aims to tackle water scarcity on a larger scale. It aims to facilitate groundwater recharge, construct essential water structures, and preventing soil erosion. This expansion empowers additional rural communities, helping them build greater climate resilience and secure reliable water resources for both agricultural and domestic needs. FY25, Jalvaibhav 2.0 focused on constructing water structures, streamlining groundwater recharge, and preventing soil erosion. These efforts aimed to empower rural communities in building climate resilience and securing water resources for agricultural and domestic use. The project focused on creating and maintaining water structures, increasing water harvesting capacity, and strengthening Water User Groups (WUGs) to ensure long-term water sustainability and resilience against climate challenges. Corporate Overview Statutory Reports Financial Statements L&T Finance 287
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Social Inclusion 1 2 3 4 In India’s diverse socio- economic landscape, millions continue to face barriers to basic necessities, particularly in rural and underserved areas. Despite economic growth, disparities in access to healthcare, safety measures, and livelihood opportunities persist, especially for women, differently-abled individuals, and rural youth. Your Company’s Social Inclusion initiatives are designed to bridge these gaps by integrating preventive healthcare, skills training, and road safety initiatives. By addressing these interconnected challenges, LTF aims to create a future where no one is left behind, fostering a society built on empathy, equity, and shared prosperity. Skilling: Empowering Unemployed Youth Equipping the youth, especially from underrepresented communities, with relevant and market-driven skills is essential for enhancing employability and stimulating economic advancement. The Banking, Financial Services, and Insurance (BFSI), a Transforming Lives through Skill Development The Skilling initiative is making a tangible impact in Salem, Tamil Nadu—a region where economic prospects are limited, and youth unemployment remains a pressing concern. By focussing on industry- specific training, the programme equips participants with targeted BFSI skills, expertise in customer relations, and financial literacy. This methodical approach enhances job preparedness and fosters financial inclusion, benefitting individuals and the broader economy alike. In alignment with the Skill India Mission, this endeavour plays a key role in empowering youth by bridging the divide between education and employment. key segment of India’s economic framework, continues to struggle with a considerable skill deficit, limiting the growth of aspiring professionals. In response to this challenge, the Skilling programme has been meticulously designed to offer targeted training that empowers 200 youth individuals to attain sustainable employment within the BFSI industry. Integrated Annual Report 2024-25288
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Two-Wheeler Road Safety Campaign in Delhi NCR Road Safety Barricades in Mumbai By aligning skill development with industry needs, this initiative addresses the dual challenges of unemployment and financial stability, fostering long-term economic security. As the BFSI sector continues its expansion, programmes like Skill In are essential to building an inclusive workforce, ensuring that untapped talent is identified and nurtured. Making Health Care Accessible through Health Camps Access to primary healthcare remains a major challenge in many rural and underprivileged areas of India, especially in regions like West Bengal with limited healthcare infrastructure. To address the same, LTF partnered with Microfinance Institutions Network (MFIN) to conduct 19 health camps across three districts, benefitting over 2,000 individuals. These camps provided essential healthcare services, including general check-ups, preventive care, and health awareness sessions. To date, over 210 health camps have been organised, delivering primary healthcare services to thousands of underserved individuals. This initiative improves immediate health outcomes, raises awareness about preventive care, helps build healthier, and more resilient communities. Creating a Culture of Road Safety India accounts for a significant proportion of global road accidents, with two-wheelers being the most In Mumbai, the chaotic urban traffic demands innovative solutions to ensure pedestrian and driver safety. LTF’s initiative involved the deployment of road safety barricades across high-risk zones, combined with awareness programmes in government schools. Through this effort, over 17,000 individuals, including 15,000 students, have been made aware of road safety protocols. By promoting early education on road safety and implementing practical measures, the campaign aims to instil lifelong safe commuting habits, protecting lives and easing traffic management in one of India’s busiest cities. vulnerable. In response to this alarming trend, LTF conducted a two-wheeler road safety campaign in Delhi NCR, reaching over 1 lakh youth to promote safe riding practices. The campaign focusses on helmet use, speed regulation, and traffic awareness. It fosters a culture of responsible road behaviour among young riders, thereby reducing the risk of accidents and fatalities. Corporate Overview Statutory Reports Financial Statements L&T Finance 289
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CSR Communication CSR Governance LTF acknowledges that purposeful engagement is crucial in nurturing deep connections between its initiatives and the communities they benefit, alongside the stakeholders whose support is vital to their success. Your Company establishes an annual CSR communication plan, setting benchmarks for delivering timely and relevant updates to all stakeholders. This approach ensures a consistent flow of information and reinforces LTF’s commitment to transparency and accountability. Your Company’s CSR governance framework is built around a well- defined structure, with the Board of Directors and the CSR & ESG Committee playing central roles in policy formulation, approval, and monitoring CSR activities. The Board ensures that LTF allocates at least 2% of its average net profits from the last three financial years to CSR projects. The CSR & ESG Committee oversees the implementation of these projects and ensures compliance with regulatory requirements. The CSR team plays a crucial role in identifying, planning, and executing CSR initiatives, ensuring legal compliance, stakeholder engagement, and financial transparency. LTF’s CSR projects are managed through a project- based approach, with clear goals, timelines, and measurable outcomes. An annual action plan outlines the CSR activities for the year, and external implementing partners are carefully selected based on the laid down criteria. Key Highlights of FY25 Continuous Monitoring and Evaluation Expanded Media Presence This year, over 1,000 online posts and print media articles highlighted LTF’s CSR activities, gaining coverage in reputable publications such as Fortune Magazine and Business Outlook, among others. These publications reflect the depth and breadth of the initiatives, inspiring stakeholders to rally behind the LTF’s cause. Monthly online reviews facilitate project discussions with NGO partners, enabling proactive decision-making and monitoring of project progress. On-site field visits offer firsthand insights into project implementation, interaction with project beneficiaries. Integrated Annual Report 2024-25290
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Digital Sakhi Video Podcast Series Stakeholder Engagement Study in Progress LTF has launched an exclusive video podcast series (7 episodes) to amplify the voices of women entrepreneurs empowered through its initiatives. In this podcast, your Company has successfully captured the impact of its active Digital Sakhi projects through a dedicated podcast series. This series brings forth the voices of women entrepreneurs, beneficiaries, employees, and community leaders. Link to the podcast series: https:// www.earshot.in/series/lt-finance- digital-sakhi-project-podcast-hindi Community Grievance Redressal Mechanism In FY25, LTF maintained a robust grievance redressal framework, ensuring effective addressing of community and stakeholder concerns. Strengthened Mechanisms for Transparency Dedicated Grievance Redressal Officers (GROs) are continuously working to ensure that complaints are handled In FY25, 0 grievances or concerns were recorded in CSR projects. Way Forward LTF is committed to developing a strategic blueprint that will fulfil the roadmap for FY28 and FY30, focussing on sustainable growth, long-term viability, and operational supremacy. This approach is underpinned by a series of well- defined milestones and objectives, steering the organisation towards its goal for the future. In practice, the strategies are already yielding impactful results, demonstrating the success of the current initiatives. The progress to date highlights the efficacy of executed strategies and the momentum that will carry the organisation towards exceeding its aspirational goals. LTF has conducted a stakeholder engagement study to gain deeper insights into the perspectives of its stakeholders, including beneficiaries, community leaders, and project partners. This study guides LTF’s communication strategy, ensuring it aligns with their expectations and maximises the impact of your Company’s efforts. Marking a decade of the Pradhan Mantri Jan Dhan Yojana in 2024, LTF’s Digital Sakhi programme has continued to illuminate the path of financial inclusion and digital empowerment. In this spirit, संKALAN—a curated collection of success stories from the Digital Sakhi initiative—has been launched. संKALAN successfully captures Bharat’s potential, inspiring stakeholders and reinforcing LTF’s commitment to meaningful CSR impact. independently, and without bias. Their independent operation from project implementation teams helps build trust and accountability, as stakeholders can be confident that grievances are addressed transparently. Additionally, by tracking and publicly documenting the resolution process, GROs ensure that decisions are made openly and that the project remains accountable to the communities it serves. Community Advisory Panels (CAPs), that are now active in all projects and have been running for over two years, held quarterly meetings to gather and address feedback. These panels, comprising respected local representatives have enhanced project oversight with unbiased reviews and actionable suggestions. Launch of संKALAN Corporate Overview Statutory Reports Financial Statements L&T Finance 291
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Glimpses of CSR initiatives Integrated Annual Report 2024-25292
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Enhancing Customer Acquisition LTF strengthens customer acquisition through financial inclusion, trust- driven engagement, and digital literacy initiatives. Programmes like Digital Sakhi and rural outreach enhance financial awareness, while strategic partnerships expand accessibility, ensuring deeper market penetration and increased customer onboarding. Sharpening Credit Underwriting Stakeholder trust and customer engagement provide valuable behavioural insights, improving credit assessment. Financial literacy programmes reduce default risks by promoting responsible borrowing, while strong regulatory relationships ensure transparent, data- driven underwriting practices that enhance credit quality and risk management. Implementing Futuristic Digital Architecture LTF’s digital adoption is driven by customer trust and accessibility-focused initiatives. AI- powered interfaces, multilingual support, and vernacular outreach enhance engagement, ensuring seamless digital transactions while strengthening stakeholder confidence in a tech- enabled financial ecosystem. Heightened Brand Visibility CSR initiatives, ESG-driven partnerships, and financial inclusion efforts position LTF as a responsible financial institution. Customer-centric engagement fosters goodwill, amplifying brand recognition through positive word-of-mouth, regulatory trust, and stronger investor confidence. Capability Building Stakeholder relationships drive talent attraction, industry collaboration, and knowledge sharing. Customer insights refine service strategies, while technology and regulatory partnerships fuel innovation, enhancing LTF’s ability to adapt, scale, and lead in financial services. Strategic Contribution of Social and Relationship Capital LTF uses its social and relationship capital to achieve strategic objectives in alignment with its 5-Pillar framework. The contributions include: Corporate Overview Statutory Reports Financial Statements L&T Finance 293
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Planet Prosperity through Environmental Stewardship In today’s rapidly changing world, businesses have a responsibility towards the environment. Your Company recognises that economic success and environmental sustainability are inherently linked. Recognising the vital connection between environmental sustainability and economic success, LTF incorporates responsible environmental stewardship into its business strategy, in alignment with global frameworks like the UN SDGs. Your Company minimises its ecological footprint and creates long- term stakeholder value through initiatives like renewable energy adoption, use of energy efficient systems, resource optimisation, and carbon sequestration. These efforts enhance operational efficiency, mitigate climate and physical risks, and foster strong community and stakeholder relationships, ensuring a sustainable and resilient business model. Natural Capital Alignment to Material Issues Climate and Decarbonisation Strategy Operational Eco-Efficiency Alignment to UN SDGs GRI Linkages GRI 302: Energy 2016 GRI 303: Water and Effluents 2018 GRI 304: Biodiversity 2016 GRI 305: Emissions 2016 GRI 306: Waste 2020 GRI 308: Supplier Environmental Assessment 2016 Integrated Annual Report 2024-25294
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~16% Carbon (Scope 1+2) Emission Saved/Sequestered Y-o-Y >90% Overall Plantation Survival Rate ~3,692 tCO2e Emissions Avoided (Green Power+ Green Attributes) 100% Paperless Journey in Rural Group Loans, Two-Wheeler Finance, Farm Equipment Finance, Personal Loans, and SME Finance ~973 tCO2e Sequestered through Plantation 3 Portfolios Financed Emission Reported ~79% of Maharashtra Branches Switched to Green Power 250+ Acres of Green Cover ~33% Company Operations through Green Power ~176 lakh kl Water Replenished (Watershed Management) 64,000+ EVs Financed ~51 tonnes Waste Recycled 1 lakh+ Saplings Planted Key Highlights 50 Branches Waste Assessment Conducted ~69 Species of Faunal Biodiversity Supported ~39 Species of Floral Biodiversity Created Through Plantation Corporate Overview Statutory Reports Financial Statements L&T Finance 295 295
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Capitals Impacted Financial Capital LTF strategically invests in natural capital by adopting renewable energy and resource-efficient processes, aligning with its ESG goals and Lakshya 2026 strategy. For instance, LTF powers over one-third of its operations with green energy and aims for carbon neutrality by 2035. These initiatives may require upfront investment, but they enhance long-term financial stability by lowering operational costs and mitigating climate risks, while also opening avenues for sustainability-linked borrowings. Manufactured and Intellectual Capital Investments in natural capital enhance LTF’s manufactured and intellectual capital. By sourcing 100% renewable energy at its head office and 25 branches, and green attributes for its branches and meeting centres, LTF reduces environmental impact and improves resilience. The adoption of green chemicals for sanitation, recycled paper, and digitalisation further strengthens its operational framework. Additionally, through its Sustainable Finance Framework, LTF promotes renewable energy, clean mobility, and sustainable farming, integrating ESG criteria into its offerings to solidify its position as a leader in sustainable finance and drive long-term growth. Social and Relationship Capital LTF prioritises social initiatives through its CSR framework (3S: Social Impact, Scale, and Sustainability), focussing on water conservation, and carbon sequestration. These efforts not only create significant social value but also strengthen relationships with communities and stakeholders. LTF promotes financial inclusion by offering loans to women entrepreneurs and underserved communities. Human Capital LTF enhances human capital through employee engagement initiatives, including focus on sustainability. Training programmes on ESG principles, sustainable commuting options like carpool, and eco-friendly workplace facilities contribute to aligning employees with LTF’s environmental goals while improving workforce satisfaction. Integrated Annual Report 2024-25296
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Environmental Policy LTF’s Environmental Policy focusses on minimising its environmental footprint through energy conservation, waste management, emissions reduction, and transparent environmental reporting. This policy applies across all offices and branches, ensuring regulatory compliance, and fostering a culture of environmental responsibility. An Environmentally Conscious Approach LTF’s governance framework plays a critical role in implementing and overseeing its sustainability practices, with Board-approved ESG policies ensuring that sustainability is embedded in strategic decision- making. Oversight is provided by key committees, including the Risk Management Committee ('RMC'), and the CSR & ESG Committee, to align actions with long-term environmental and social goals. The Board monitors environmental performance, promoting accountability and continuous progress. Your Company maintains environmental competency through Guided by the UN’s Decade of Action and in alignment with India’s commitment to contribute towards UN SDGs, LTF embeds environmental responsibility at the core of its operations. By optimising the use of natural resources, minimising environmental impact, and driving value-based initiatives, your Company seeks to contribute to a healthier planet while strengthening its business resilience. Sustainability is not merely a commitment but a core principle that drives your Company’s decisions and actions towards building a more sustainable future. regular training, engagement with experts, and by incorporating ESG expertise into the board evaluation process. The CSR & ESG committee provides oversight to ESG-related issues, including climate related goals, ensuring informed decision- making, while the MD & CEO plays a role in climate-related decisions and budget approvals for mitigation efforts, embedding ESG into business strategies. Each year, the CSR & ESG Committee reviews all ESG policies. The ESG performance is assessed annually by the Committee. Additionally, the ESG-related KPIs are integrated into Senior Management KPIs, with the Managing Director and Chief Executive Officer’s compensation including ESG parameters as part of KRA. To support these initiatives, LTF allocates budgets for ESG and Facility & Channel Management, enabling the adoption of green power, digitalisation, energy efficiency, carbon sinks, and addressing financed emissions through services like EV financing. The Company’s governance structure ensures continuous progress and aids LTF’s leadership in sustainable finance. Environmental Governance Framework Key Policies Governing Environmental Sustainability ESG Policy Your Company’s ESG policy guides its financing decisions, ensuring support for sectors and projects aligned with its sustainability values. The policy includes an exclusion list that prevents financing environmentally harmful industries like thermal power and mining. Furthermore, this policy provides guidelines to protect natural capital and promotes sustainable development. E-Waste Policy LTF’s E-Waste Policy, aligned with its sustainability commitments, promotes the responsible disposal of electronic waste. The policy aims for zero waste to landfill, while ensuring compliance with relevant regulations for the safe disposal of electronic goods. Corporate Overview Statutory Reports Financial Statements L&T Finance 297
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Third-Party Code of Conduct (TCOC) Newly adopted Sustainable Procurement Policy LTF’s TPCOC extends its sustainability principles to suppliers, requiring adherence to responsible business practices. Your Company assesses critical ESG factors such as emissions, energy use, waste management, and human rights to ensure sustainability throughout its entire value chain. To strengthen this commitment, LTF actively collaborates with value chain partners to align them with its sustainability goals. Your Company engages suppliers through regular To minimise LTF’s environmental footprint, sustainability should be integrated into the procurement assessments, training programmes, and capacity-building initiatives that promote best practices in ESG compliance. By setting clear expectations and integrating sustainability criteria into its value chain processes, LTF ensures that its partners contribute to shared environmental and social objectives. process by focusing on ethical sourcing, human rights, and fair labour practices within the supply chain. Transparency and accountability should be fostered through supplier collaborations committed to reducing carbon emissions, using sustainable materials, and supporting circular economy principles. This policy displays your Company's commitment to sustainability and responsible business practices by ensuring that your Company’s supply chain matches with its long- term objective of creating value for stakeholders, while reducing environmental impact and fostering positive social outcomes. Integrated Annual Report 2024-25298
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Building Climate Resilience LTF acknowledges the growing environmental challenges arising from climate change. These challenges include extreme weather events, rising sea levels, and desertification. The environmental costs are escalating, with developing nations projected to face annual losses of US$ 447-894 Bn by 2030. For businesses, physical risks, such as extreme weather events, and transition risks, including rising carbon pricing, are transforming markets and reshaping business models. In this evolving landscape, your Company understands the critical role financial institutions play in fostering a low-carbon, climate- resilient future. LTF’s climate action strategy reflects a comprehensive approach, seamlessly integrating environmental considerations across its operations. By focussing on climate resilience, your Company builds a strong business portfolio, while delivering long-term value for stakeholders. LTF’s sustainability driven initiatives exemplify a commitment to responsible and future-ready business practices. Beyond its products and services, your Company embeds climate- conscious strategies into its core operations, focussing on resource efficiency and operational sustainability. This holistic approach ensures that sustainability remains integral to business decisions, fostering a culture that is adaptive, forward-looking and responsive to evolving environmental realities. Your Company’s climate action framework has set clear targets, including achieving carbon-neutrality by 2035 and maintaining water surplus operations. These targets guide LTF’s planning and resource allocation, while ensuring that stakeholder engagement aligns with sustainability goals, thereby reinforcing long-term value creation. Integrating Climate Risks into Business Operations LTF recognises the critical importance of incorporating climate risks into its business operations to ensure long- term resilience and sustainability. By embedding relevant risks into its Risk Management Framework, Risk Appetite Statements, and Early Warning Signals, LTF strengthens its ability to navigate the challenges posed by physical risks. Achieving Carbon Neutrality by 2035 Maintaining Water Positive/ Surplus Status LTF’s Sustainability Goals Managing Physical and Transition Risks Physical risks, such as extreme weather events, floods, and droughts, are integrated into LTF’s risk management practices. Your Company actively assesses these risks to anticipate potential disruptions and ensure continuity in operations. Transition risks, arising from changes in regulations, market dynamics, and evolving consumer preferences for sustainable solution are also integrated into decision-making. Climate Risk Assessment in Portfolios LTF applies a thorough approach to assessing climate risks across its key portfolios, including Urban Finance, SME, and Rural Finance. Tools and models are employed to evaluate climatic factors such as rainfall patterns and irrigation coverage, which influence portfolio performance. A geographic analysis helps identify regional vulnerabilities, ensuring that climate risks are factored into lending decisions. Corporate Overview Statutory Reports Financial Statements L&T Finance 299
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Governance and Oversight of Climate Risks Strong governance frameworks are integral to managing climate risks. LTF, through its Board and CSR & ESG Committee, ensures that sustainability objectives are embedded in your Company’s operations. The Chief Economist updates the Board on Environmental & Climatic parameters at regular intervals including Board meetings. Regular third-party audits and scenario analyses further reinforce compliance and transparency. Financial Impact of the Climate-Related Risks Climate-related risks have a significant impact on LTF’s financial position, performance, and cash flows, particularly through borrower repayment challenges, and potential operational disruptions. Acute physical risks, such as extreme weather events, can affect borrowers’ earnings, leading to increased credit defaults and higher provisioning requirements. Transition risks, driven by evolving regulations and sustainability reporting mandates, may result in compliance costs and reputational risks. However, these risks also create opportunities for growth, such as expanding green finance and developing sustainable products. By integrating climate considerations into its business strategy, LTF mitigates potential financial impacts while strengthening its resilience and market position in sustainable finance. Identifying Climate- Related Opportunities LTF recognises climate change as not only a challenge but also a significant opportunity to drive sustainable growth and financial innovation. By integrating climate-related risks into its business strategy, LTF has actively identified and is capitalising on emerging trends in low-emission goods and services. A key focus area is EV financing, which supports the transition from fossil fuel-based vehicles to cleaner alternatives. Additionally, the increasing demand for sustainable infrastructure, and green buildings, and renewable energy presents further opportunities for responsible growth through retail financing. By aligning with regulatory trends and market shifts, LTF is continuing to expand its green finance portfolio. Assessing Climate Risk in Line with TCFD The Draft Disclosure Framework on Climate-related Financial Risks and the Discussion Paper on Climate Risk and Sustainable Finance ('Discussion Paper'), issued by the RBI, recommend Task Force on Climate-related Financial Disclosures (TCFD)-aligned reporting as a desirable initial step to ensure uniformity in disclosing climate-related risks and opportunities across India’s banking sector and upper layer NBFCs. Accordingly, LTF is further working to integrate a climate risk framework that encompasses governance, strategy, risk management, and specific metrics and targets related to climate risk, while also capturing the interactions and associated impacts. LTF has established a governance framework to oversee climate-related risks and opportunities. Climate considerations are integrated into the broader risk management and strategic planning processes. There are efforts underway to further embed climate considerations into decision- making across the organisation and strengthen internal capabilities in this area. LTF became a signatory to the global initiative Partnership for Carbon Accounting Financials (PCAF) in FY25. By joining PCAF, your Company strengthens its ability to transparently measure and report portfolio emissions, facilitating more effective management of climate risks and contributing significantly to India's Net Zero goal by 2070. Integrated Annual Report 2024-25300
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LTF’s portfolio is predominantly retail-centric, comprising asset classes such as Farm Equipment Finance, Rural Group Loans & Micro Finance Loans, Two-Wheeler Finance, Personal Loans, Home Loans, Loan Against Property, and SME Finance. The portfolio is currently exposed to a range of physical climate risks, including floods, droughts, and extreme weather events. These physical risks can affect a borrower’s financial capacity by causing damage to physical assets, disrupting supply chains, increasing operational costs, and affecting market dynamics. Hence, your Company has undertaken identification and measurement of climate-related risks through portfolio heatmapping, and physical risk assessment. As part of the portfolio heatmapping exercise, LTF identified risk concentrations and areas of heightened vulnerability within its portfolio. This exercise provided a granular view of climate risk and has been conducted to evaluate and categorise the physical risks across your Company's collateralised retail portfolios including Home loans, Farm Equipment Finance, and Two-Wheeler Finance. The methodology for assessing portfolio heatmapping involved classifying risks using external analysis conducted by ThinkHazard. This analysis evaluated the likelihood and potential impact of key perils, including various flood types, cyclones, extreme heat, landslide, and water scarcity, primarily at a district level using location data. Based on this assessment, risks were classified into Very Low, Low, Medium and High categories. The resulting heatmaps provide a clear understanding of your Company's material physical risks, directly informing the management with data- driven insights. Recognising the growing materiality of climate-related risks on the lending, the Company has initiated efforts to integrate climate scenario analysis into their risk management framework. Scenario analysis is a forward- looking assessment that allows the Company to explore different climate pathways, including how physical risk scenarios could impact the Company’s operations, lending portfolio, and strategic outlook over the short, medium, and long-term. The following scenarios were chosen for this analysis: RCP 4.5: A stabilisation pathway with moderate policy intervention and adaptation, RCP 8.5: A high-emissions scenario reflecting business- as-usual trajectories with more severe impacts. These two scenarios effectively capture both realistic and extreme climate risks, making them suitable for assessing potential financial impacts on the Company's portfolio. LTF has prioritised three physical risk hazards relevant to the current retail portfolio for scenario analysis, namely, coastal floods, riverine floods and drought. LTF’s climate transition plan currently focuses on Scope 1 and Scope 2 emissions, with an emphasis on reduction and sequestration of residual emissions. LTF has been consistently reporting on Scope 1, Scope 2, and Scope 3 greenhouse gas ('GHG') emissions, as well as detailing the reduction and sequestration efforts undertaken. These emissions are calculated in accordance with the GHG Protocol, using the operational control approach for boundary setting. Additionally, LTF monitors GHG emissions across all categories using standardised methodologies aligned with global protocols. These metrics facilitate informed decision-making and assess progress towards your Company's climate-related goals. Corporate Overview Statutory Reports Financial Statements L&T Finance 301
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Registered emissions intensity per employee (Scope 1 & 2) at 0.25 tCO2e/FTE Decreased emissions intensity per employee to 0.155 tCO2e Recorded emissions intensity per employee at 0.165 tCO2e/FTE Reduced carbon emissions by 20% on estimated footprint Announced commitment to becoming carbon neutral by FY35 Registered emissions intensity per employee at 0.18 tCO2e/FTE Reduced Scope 1 & 2 GHG emissions by approximately 18%, compared to FY24 Increased reliance on renewable energy to 39% of operations Reduced CO2 emissions by approximately 1,840 tonnes through green energy transitions at the Head Office and 24 branches Recorded emissions intensity per employee at 0.09 tCO2e/FTE Reduced energy intensity/ FTE by ~4%, compared to FY24 Reliance on renewable energy to ~33% of operations Avoided ~3,692 tCO2e at the Head Office and 25 branches Reduced GHG emissions by nearly 30% through energy efficiency and renewable energy uptake Expanded green energy usage to additional branches, bringing total renewable energy adoption to 39% of operations Recorded emissions intensity per employee at 0.12 tCO2e/FTE FY22 FY21 FY20 FY19 FY24 FY25 FY23 Decarbonisation Journey LTF has advanced sustainably since the implementation of its comprehensive decarbonisation strategy in 2019, systematically incorporating environmental considerations into its operations. Over the years, your Company has made tangible progress by adopting renewable energy solutions, enhancing energy efficiency and steadily lowering carbon emissions. These accomplishments reinforce LTF’s growing leadership in responsible action and pave the way for reviewing its key environmental milestones. Integrated Annual Report 2024-25302
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Reducing Emissions, Energising Sustainability As part of its comprehensive sustainability strategy, LTF continues to prioritise responsible energy management as a core aspect of its environmental stewardship. Your Company is dedicated to reducing the environmental impact of its operations and integrate eco-friendly practices into its business processes. In FY25, LTF continues to build upon its progress in optimising energy consumption and transitioning to renewable energy sources across its operations. Ensuring Energy Efficiency In FY25, LTF reinforced its commitment to energy efficiency through a series of impactful initiatives aimed at reducing operational energy consumption and dependence on non-renewable sources. Despite a ~19% increase in the scale of operations and manpower, your Company has ensured that energy efficiency remains a core operational priority. We continue to adopt smart, sustainable solutions that balance business growth with environmental responsibility. One of the key enablers of this progress has been the integration of IoT-based monitoring systems across seven branches, allowing for real-time energy tracking, predictive maintenance, and intelligent consumption controls. These systems have helped identify and eliminate energy leakages, optimise load usage, and improve overall energy performance. As we scale further, LTF remains focused on leveraging technology and innovation to drive long-term energy efficiency across its operations. Renewable Energy Integration and Expansion Energy Efficiency and Operational Optimisation 25 Branches + Head Office Running on Renewable Energy ~4% Reduction in Energy Intensity/FTE Building on the achievements of FY24, LTF has expanded the transition to renewable energy by increasing the number of branches powered by green energy in FY25. Green energy was also used in Telangana and Tamil Nadu. In FY25, your Company sourced renewable energy for 26 of its operational sites, including the Head Office and key regional branches. LTF continuously monitors the availability of green power across the country and adopts facilities wherever available and feasible. LTF’s expansion of green energy adoption across a growing number of locations is a major step towards achieving its goal of reducing its carbon footprint and dependence on non- renewable energy sources. Currently, your Company owns one premise , while the remaining locations are either leased or semi-leased. Converting these leased and shared-leased premises into green energy-led locations presents a challenge. However, your Company is actively working to reduce energy consumption across these premises, subject to the mutual agreement of the other tenants. To bridge this gap, LTF has leveraged green attributes (iRECs) from verified renewable energy generators in India, which are acceptable under RE100 criteria. This also supports your Company's renewable energy goals and reinforces its commitment to reducing its carbon footprint. Despite the increase in number of working days and flexi-time benefit which led to increase in energy consumption, your Company has continued to optimise its energy usage in offices and data centres. LTF has achieved this by implementing advanced energy saving technologies, which include the continued use of energy efficient equipment such as LED lighting, 5-star-rated air conditioners, and smart IoT solutions for real-time energy monitoring and optimisation. These practices ensure that LTF operates at peak energy efficiency, while maintaining business operations and controlling operational costs. In addition to regulating the electricity consumption, your Company is also working on refining its processes around the use of diesel and other fossil fuels for backup generators. LTF is committed to optimising fuel consumption, which directly impacts the reduction of carbon emissions from transportation and power generation. In FY25, capital investment in energy conservation equipment amounted to ~₹ 1.27 Cr. Corporate Overview Statutory Reports Financial Statements L&T Finance 303
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Energy Audits and Monitoring As part of its ongoing energy management process guided by its environment policy, LTF continues to conduct energy audits to assess energy usage patterns across its operations. These audits help identify further opportunities for saving energy and utilising them to continuously improve energy performance. Monitoring and Managing Emissions As a responsible corporate entity, your Company recognises that addressing climate change is integral to long-term business sustainability. Effective emissions management not only reduces environmental impact but also enhances operational efficiency and resilience. LTF is committed to minimising its carbon footprint and achieving Carbon Neutrality Status (Scope 1 and Scope 2) by 2035. This change is being brought about through a structured approach that includes precise emissions measurement and targeted reduction strategies. Additionally, transparent reporting, aligned with internationally recognised frameworks such as the GHG Protocol Corporate Standard and PCAF Global GHG Accounting and Reporting Standard for the Financial Industry, is a part of this approach. As a company primarily engaged in financial services, LTF’s direct emissions are mostly linked to operational activities. These emissions mainly result from fuel combustion in diesel generators, Company-owned vehicles, LPG use for providing meal facility, and fugitive emissions from refrigerant leakage in air-conditioning systems and fire extinguishers. Recognising the environmental impact of these operations, your Company has taken proactive measures to reduce Scope 1 emissions. In FY25, LTF further reduced emissions through multiple initiatives. Your Company ensured regular maintenance of its owned vehicles and diesel generators, thereby optimising fuel consumption across its fleet. Additionally, LTF has embraced the use of low-GWP (Global Warming Potential) refrigerants, such as R32, in place of older, less environmentally friendly models like R22. To enhance refrigerant management, your Company is centralising its air conditioning maintenance contracts under a single vendor. This pilot initiative will improve refrigerant tracking. These measures have contributed to minimising the potential for ozone depletion and climate change, while ensuring regulatory compliance. Scope Direct GHG Emissions 1 Scope 1 Emissions GHG Emissions Unit FY23 FY24 FY25 Fuel in DG Set tCO2e 2.43 3.25 2.17 LPG Consumption at rural branches tCO2e NA 9.89 17.15 Company-Owned Vehicles tCO2e 48.25 46.14 51.64 Refrigerant tCO2e 297.00 306.61 315.03 Fire Extinguisher tCO2e 39.46 39.58 0.24 Total tCO2e 387.14 405.47 386.23 Note: The emission factor is sourced from DEFRA Integrated Annual Report 2024-25304
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Your Company has actively pursued renewable energy procurement, in alignment with which 100% of the electricity requirements for the Head Office and 25 branches are met through green power. To address its emissions comprehensively, LTF has adopted both location-based and market-based approaches to calculating Scope 2 emissions. The location-based approach reflects emissions from grid electricity consumption at its operational sites, while the market-based method accounts for the use of renewable energy procurement mechanisms. This dual approach provides a nuanced understanding of your Company’s carbon footprint and ensures alignment with global best practices. Given the challenges posed by operational constraints, particularly in small, leased branches without dedicated metering, direct procurement of renewable energy is not feasible in all cases. To bridge this gap, LTF has leveraged International Renewable Energy Certificates ('iRECs') from verified renewable energy generators and acceptable under RE100 criteria. These iRECs enables your Company to claim green attributes for electricity consumed in such locations, supporting its renewable energy goals and reinforcing its commitment to reducing its carbon footprint. In FY25, your Company procured green attributes, i.e., I-RECs, Scope Indirect GHG Emissions 2 Scope 2 Emissions (market-based approach) Note: The emission factor is sourced from DEFRA from a solar PV project in India. These certificates were issued for supplying green power to the grid during FY25. Furthermore, upgrades to energy- efficient lighting, including 5-star- rated ACs, LEDs, and IoT devices, have further reduced emissions. These initiatives, combined with the use of green attributes to encourage the adoption of renewable energy where direct purchase is not feasible, have contributed to a ~17% tCO2e reduction in Scope 2 emissions. In the absence of your Company's efforts to procure green power and green attributes (iREC), the Scope 2 emission would have been 5,592.68 tCO2e (location-based approach). GHG Emissions Unit FY23 FY24 FY25 Electricity – Head Office tCO2e 0 0 0 Electricity – Branches tCO2e 1,604.27 1,485.48 1,909.16 Electricity – Branches (Small/Rural Group Loans and Micro Finance Branches) tCO2e 1,323.97 826.77 0 Total tCO2e 2,928.24 2,312.25 1,909.16 Note: The emission factors are sourced from CEA. Corporate Overview Statutory Reports Financial Statements L&T Finance 305
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GHG Emission Categories Unit FY23 FY24 FY25 C1: Purchased Capital Goods and Services* tCO2e 367.65 453.29 12,165.37 C2: Capital Goods tCO2e 2,331.79 3,893.92 4,891.42 C3: Fuel- and Energy-Related Activities tCO2e - - 335.50 C5: Waste Generated in Operations tCO2e - - 134.34 C6: Business Travel tCO2e 1,297.76 1,962.75 2,253.14 C7: Employee Commute tCO2e - - 28,766.10 C8: Upstream Leased Assets tCO2e 54.72 388.39 594.13 Scope Other Indirect GHG Emissions 3 Scope 3 Emissions Note: The emission factors are sourced from DEFRA, the India GHG Programme EE10, and the WIOD database. The categories for which data has not been mentioned are not applicable for your Company. *C1: Increase in FY25 is due to increased items/goods/services being measured Scope 3 emissions stem from activities beyond LTF’s direct operations, including employee commuting, business travel, and financed emissions associated with the lending portfolio. In FY25, your Company has taken steps to reduce its Scope 3 emissions, focussing on key categories outlined below : Category Upstream Transportation and Distribution: This category has not been calculated in the base year as it is not relevant to your Company’s operations. 4 Category Purchased Capital Goods and Services: LTF is working on optimising procurement practices to reduce the environmental impact of indirect emissions, such as those from paper consumption and office supplies. 1 Category Waste Generated in Operations: Your Company is minimising waste generated in operations through employee awareness, single use plastic ban, and recycling, among others. 5 Category Capital Goods: Your Company is investing in energy- efficient and low-carbon alternatives for infrastructure, office equipment, and other capital goods to reduce emissions in this category. 2 Category Business Travel: LTF is limiting emissions from business travel by centralising travel management. 6 Category Fuel- and Energy-Related Activities: Your Company is minimising emissions by optimising energy use, promoting renewable energy, and implementing energy-saving measures. 3 Integrated Annual Report 2024-25306
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Category Use of sold products: As an NBFC, your Company’s primary business involves providing financial services such as loans, mortgages, rather than selling physical goods. Therefore, the concept of 'use of sold products' does not apply. 11 Category Upstream Leased Assets: LTF is also reducing emissions from leased assets by improving energy efficiency and collaborating with lessors to implement sustainable practices. 8 Category Franchises: Your Company does not operate on a franchise model, as its business structure does not involve franchising services or products. All operations are directly managed, rendering this category irrelevant. 14 Category End-of-Life Treatment of Sold Products: Since your Company does not engage in the sale of physical products, there are no items requiring disposal or recycling, making this category irrelevant. 12 Category Downstream Leased Assets: Your Company does not own or lease assets that fall under this category, as its operations are centred around financial services without leasing physical equipment or property. 13 Category Employee Commute: LTF has a dedicated employee bus service for facilities located in Kalina, Mahape in Maharashtra. Additionally, your Company has started an employee carpool initiative in collaboration with sRide, a carpooling app. This initiative aims to reduce individual vehicle usage. 7 Category Downstream Transportation and Distribution: The nature of your Company’s operations and services does not include the distribution or transportation of goods. Employee travel for service delivery is accounted for under business travel, making this category irrelevant. 9 Category Processing of Sold Products: As your Company provides financial services rather than engaging in conventional manufacturing or product processing, this category is not applicable. 10 Corporate Overview Statutory Reports Financial Statements L&T Finance 307
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Financed Emissions (Category15) In FY25, your Company became a PCAF signatory to assess financed emissions for a greener future. Your Company recognises the significant environmental impact associated with its lending activities. As a responsible financial institution, it has proactively calculated and disclosed financed emissions in accordance with the PCAF framework. In FY25, LTF has expanded its reporting of financed emissions of its portfolio over FY24 by reporting for additional portfolios for calculation of its financed emissions. In addition to Two-Wheeler and Farm Equipment Finance portfolios reported in FY24, this year LTF reported for Home Loans portfolio. The emissions estimation is conducted using the PCAF methodology. This process involved mapping products to specific asset classes, determining data requirements, and addressing potential data gaps. For example, the financed emissions were calculated by multiplying an attribution factor by the emissions of the financed motor vehicles. The attribution factor was determined by the ratio of the outstanding loan amount to the asset’s cost at loan origination. As loans are repaid, the attribution factor decreases, which ultimately reduces your Company’s exposure. Financed Emission Categories Unit FY24 FY25 Two-Wheeler Loan Portfolio lakh tCO2e ~6.43 ~6.64 Tractor Loan Portfolio lakh tCO2e ~11.48 ~16.09 Home Loans Portfolio lakh tCO2e ~0.80 ~1.24 Financed Emissions This expansion aims to provide a comprehensive picture of its carbon impact. By adhering to the latest PCAF guidelines and improving data reliability, LTF ensures its emissions data is accurate, transparent, and in line with industry standards. This enhances the effectiveness of your Company’s decarbonisation strategy and enables better tracking and progress towards sustainability goals. Note: The Financed emissions calculations for FY24 were prepared through external expert and the same methodology was used by internal team to compute FY25 emissions for the disclosed portfolios. Integrated Annual Report 2024-25308
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Financing for a Better Planet Air Emissions Sustainable finance is central to your Company’s ESG strategy. As a lending institution, LTF’s role extends beyond generating financial returns to creating social and environmental value. While air emissions like NOx and SOx are not directly linked to NBFCs’ core activities, managing them is crucial for regulatory compliance, risk management, and maintaining a strong reputation in line with ESG goals. LTF’s focus on these aspects demonstrates its commitment to sustainability and corporate responsibility. In FY25, your Company continued to monitor and report its air emissions as part of its ongoing commitment to environmental stewardship. Social Lending Initiatives LTF has implemented a comprehensive Sustainable Finance Framework, embedding ESG criteria into its lending practices. Through its Urban Finance business, your Company promotes clean mobility by financing electric vehicles ('EVs'). In FY25, EV financing supported 64,000 EVs, helping avoid approximately ~12,675.67 tCO2e emissions. LTF has also maintained an exclusion list, refraining from financing coal, thermal, and mining projects. As a responsible lender, LTF continues to enhance its financed Air emissions NOx (ppm) FY23 31.70 FY24 42.80 FY25 51.6 SOx (mg/Nm³) FY23 78.30 FY24 35.10 FY25 41.2 Particulate Matter (mg/Nm³) FY23 64.00 FY24 58.20 FY25 64.4 emissions reporting, and aligning its lending practices with international climate goals. By integrating environmental responsibility into its core business activities, your Company continues to advance its sustainability agenda, while contributing meaningfully to climate action and social equity. Corporate Overview Statutory Reports Financial Statements L&T Finance 309
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LTF continues to explore and implement measures to reduce air emissions, aligning with its sustainability objectives. The vertical garden constructed at the Head Office serves the dual purpose of improving air quality and reducing CO2 levels. Furthermore, it enhances the aesthetics of the workspace and adds to the emission reduction initiatives. By adopting these measures, LTF is ensuring a minimal environmental footprint. Further, your Company ensures regular assessments and continues improvements in operational processes to track and mitigate air emissions. Commitment to Water Stewardship LTF is committed to responsible water management, recognising the vital role water plays in its operations and the broader ecosystem. By adopting innovative water management practices, recycling initiatives, and strategic conservation measures, LTF continues to demonstrate its focus on environmental stewardship. Your Company achieved Water Neutrality in FY22 and has maintained a Water Positive/Surplus status from FY23 to FY25. Case Study LTF is committed to sustainable resource management and has undertaken significant measures to enhance water efficiency and recycling across its operations. One of its key initiatives during FY25 is the revamping of the Sewage Treatment Plant ('STP') at its Head Office. This project showcases LTF’s adoption of advanced technology to reduce its environmental footprint and sets a benchmark for sustainable infrastructure. The initiative aimed to enhance recycling capacity, reduce freshwater dependency, and integrate advanced water treatment technology. The project involved upgrading outdated infrastructure, incorporating innovative systems, and streamlining water utilisation processes. LTF collaborated with technology providers to ensure efficient and sustainable outcomes. Freshwater Savings A 24% reduction in freshwater use across the head offices. Environmental Impact Lower water footprint, contributing to LTF’s sustainability goals. Operational Efficiency Improved water treatment processes with enhanced monitoring and maintenance. Objectives and Implementation Outcomes Revamping the STP at LTF Head Office For more details about Water Utilisation and Recycling, please refer to Principle 6. Parameter FY23 FY24 FY25 Total Water Consumption (in lakh kl)* ~2.51 ~3.41 ~4.56 Total Water Replenished (in lakh kl)# 280+ 180+ 176+ Water Surplus Collected (in lakh kl) ~277 ~177 ~171 Note:*Increase in total water consumption in FY25 compared to FY24 was due to increased employee headcount and branch expansions. #In FY25, water replenishment decreased due to less rainfall and drought experienced by the project areas. Integrated Annual Report 2024-25310
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Rainwater Harvesting LTF is committed to sustainable water management and conservation through initiatives like the ‘Jalvaibhav’ project. Launched in 2016, this initiative aims to address water scarcity in the traditionally drought-prone Marathwada regions. The initiative focusses on enhancing crop yields, reducing soil erosion, and improving groundwater levels through Integrated Water Resource Management ('IWRM'). A key aspect of the programme is building water harvesting structures in villages, which significantly replenishes water resources and improves access to water for both agricultural and domestic use. To achieve this, LTF has implemented cost-effective water conservation measures, including drainage line and area treatments, as well as direct recharge methods. In FY25, LTF’s efforts led to the replenishment of ~176 lakh KL of water, compared to ~183 lakh KL of water in FY24. This replenishment exceeded your Company’s operational consumption, i.e., ~4.56 lakh KL during the year by over ~38 times. To ensure accurate monitoring and evaluation, LTF has engaged second-party experts who employ state-of-the-art technology and precise rainfall data analysis for rainwater harvesting studies. LTF has continuously increased the sampling coverage of RWH sites for these studies to enhance transparency, i.e., increased from 25% in FY23 to 35% in FY24 and 100% in FY25. This approach has enhanced the quality and reliability of reporting. Building on this success, ‘Jalvaibhav 2.0’ was introduced in FY25 to further enhance groundwater recharge and build climate resilience in new regions (Kolar, Karnataka). The project focused on constructing over 50 water structures, boosting water harvesting capacity. Your Company also trained over 500 Water User Groups ('WUGs') in water structure maintenance and efficient management, ensuring long-term sustainability. The initiative has benefitted overall more than 60,000 farmers with sustainable water management practices, directly aiding 5,000 farmers in Kolar, Karnataka. For more details about Project Jalvaibhav 2.0, please refer to the Social and Relationship Capital section. Forging Responsible Waste Management As a financial services provider, LTF does not manufacture any product that requires safe reclamation for reuse, recycling, or disposal at the end of its life. However, your Company strives to minimise waste generation and ensures responsible disposal practices throughout its operations. It adheres to the principles of Reduce, Reuse, and Recycle to effectively manage waste and minimise its environmental footprint. In FY25, LTF carried out a comprehensive waste assessment involving inventorisation, categorisation of wet and dry waste and evaluation of existing waste practices across its top 50 branches to better understand the volume and types of waste generated at each location. An external second party expert was appointed to conduct this survey. It measured waste segregation, waste generation at each branch and also calculated per capita waste generation. LTF based on the per capita waste generation data reported in the study calculated waste generated across LTF’s other branches. Thus, ensuring complete reporting of waste data conservatively where physical measurements proved unviable. This study has helped your Company device future waste management strategies. It has also enhanced the accuracy of reporting and waste emission calculations based on headcount. Additionally, LTF has partnered with an authorised vendor to ensure 100% segregation and recycling of municipal waste collected from the Head Office. The Company has taken up and achieved the target of Zero-Single-Use Plastic at its Head Office and uses steel bins instead of plastic bins for the disposal of food waste and waste generated by employees. Furthermore, through awareness initiatives on recycling and waste segregation, LTF encourages sustainable waste-handling practices. LTF’s comprehensive E-Waste policy ensures the safe disposal of electronic waste in compliance with the government’s Cross-check if this should be Cross-check if this should be E-waste (Management) Rules. E-Waste is collected and centrally processed by authorised vendors for recycling. Corporate Overview Statutory Reports Financial Statements L&T Finance 311
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Rooting for a Greener Tomorrow As part of its Carbon Neutrality plan, LTF conducts tree plantation under the ‘Project Prakruti’ initiative. The project seeks to create carbon sinks by absorbing atmospheric carbon dioxide, enhancing biodiversity, restoring degraded land and promoting ecological balance. By restoring degraded land and supporting sustainable livelihoods for local communities, the project contributes to environmental conservation and socio-economic development. Since FY18, your Company has steadily increased its annual plantation efforts. In FY25 alone, 1 lakh+ saplings were planted, bringing the cumulative count to over 2.68 lakh saplings. During FY25, these plantations sequestered approximately ~973 tCO2e. The Miyawaki mixed plantation in three villages in Maharashtra, used the Clean Development Mechanism- based Afforestation and Reforestation ('CDM A/R') methodology for carbon sequestration calculations. LTF also LTF's digital transformation is significantly reducing paper consumption by replacing traditional paper-based processes with efficient digital tools and workflows. This shift optimises resource usage, minimises the environmental impact of paper production, and reduces costs associated with paper procurement and waste management. These efforts are part of LTF’s broader objective to achieve zero-waste-to-landfill status and align its operations with best practices in environmental responsibility. By Parameter FY23 FY24 FY25 Waste Generated (MT) 46.61 62.98 266.08 Waste Recycled (MT) 7.71 16.96 50.86 Waste Disposed* (MT) 46.61 62.98 215.22 Note: Increase in total waste generated and waste disposed in FY25 compared to FY24 was due to increased employee headcount, branch expansions and increased reporting to cover 100% branches using waste management study data. For more details about Waste Management, please refer to Principle 6 of the BRSR. continually innovating in waste management, your Company is promoting sustainable practices and contributing to the well-being of the communities it serves. Integrated Annual Report 2024-25312
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adhered to international standards by implementing ISO 14064-2:2019 for its Miyawaki plantation site, ensuring the credibility and transparency of its carbon sequestration initiative. The introduction of native plant species into these plantations has reintroduced a variety of vegetation, improving the area’s biodiversity. This range of flora, including trees, shrubs, and ground cover, provides both habitat and sustenance for a wide array of wildlife, such as peacocks, mongooses, partridges, wild boars, porcupines, sparrows, butterflies, grasshoppers, snakes, and bees, among others. Beneath the soil, microorganisms like bacteria and fungi play an essential role in nutrient cycling and soil health, thus supporting the overall success of the plantation. Additionally, LTF has enhanced biodiversity by encouraging the strengthening of the honeybee population, a natural pollinator, through the installation of beehives in its Miyawaki plantation project. Other environmental benefits of these plantations include a reduction in local temperature, soil enrichment, prevention of degradation, reduced runoff, greater groundwater absorption, as well as improved water retention and recharge in the area. Through these initiatives, LTF’s ‘Project Prakruti’ not only contributes to carbon sequestration but also creates a thriving ecosystem that fosters biodiversity and environmental sustainability. For more details about Project Prakruti, please refer to the Social and Relationship Capital. Supporting Biodiversity LTF recognises biodiversity as a critical component of the environment, essential for ecological balance, climate resilience, and sustainable development. Through scientifically driven methodologies and community participation, LTF in collaboration with an NGO, has implemented a biodiversity-focused initiative through the Miyawaki plantation technique. The plantation initiative in Marathwada focusses on restoring ecological balance through Miyawaki plantations, with over 68,000 trees planted across key villages. Extensive biodiversity assessments have recorded 39 plant species and 69 faunal species, including vulnerable birds and pollinators essential for regeneration. Beyond tree plantation, the initiative engages local communities, strengthens ecosystem functions, and addresses environmental challenges like industrial impact and agricultural practices. With ongoing monitoring and sustainable practices, LTF aims to expand its efforts, ensuring long-term ecological restoration and environmental resilience. 39 Floral Species Supported 69 Faunal Species Supported 2 19 4 3 41 Insects Reptiles Birds Mammals Amphibians Species Species Species Species Species Corporate Overview Statutory Reports Financial Statements L&T Finance 313
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Key Achievements Biodiversity Enrichment: LTF’s efforts have supported significant increase in species diversity, particularly avian populations and pollinators. Improved Ecological Functioning: The Miyawaki plantations have helped restore important ecosystem functions such as water filtration, soil stabilisation, and carbon sequestration. Community Engagement: Local communities in the region actively engage with the initiative, participating in planting and conservation efforts. Their involvement ensures long-term sustainability and strengthens the local ecosystem. Biodiversity Assessment Findings Birds Species such as the Woolly-necked Stork (Vulnerable) contribute to the ecological balance. Pollinators Active honeybee colonies and various insect species are vital to pollination and seed dispersal. Mammals Sightings of Black Buck (Near Threatened), Wild Boar, Porcupine and Civet Cat add to the diversity of the ecosystem. Integrated Annual Report 2024-25314
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Enhancing Customer Acquisition Implementing sustainability initiatives that distinguish LTF by showcasing its dedication to responsible business practices. It reinforces brand value, appeals to institutional partners, and deepens customer relationships based on trust and long- term value creation. Sharpening Credit Underwriting Incorporating climate risk assessments into underwriting processes to ensure risk- adjusted financing, particularly for rural and vulnerable sectors. Implementing Futuristic Digital Architecture Utilising technology to provide digital solutions for emissions reporting, energy monitoring, and financing efficiency. This approach aligns with both operational goals and environmental responsibility Heightened Brand Visibility Embracing sustainability leadership to improve visibility and position LTF as an environmentally and socially responsible corporate entity, attracting customers, investors, and talent. Capability Building Training employees in sustainability practices to strengthen organisational capabilities, driving innovation and long- term competitive advantage. Strategic Contribution of Natural Capital LTF uses its natural capital to achieve strategic objectives in alignment with its 5-Pillar framework. The contributions include: Corporate Overview Statutory Reports Financial Statements L&T Finance 315
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Integrated Annual Report 2024-25316 Business Responsibility and Sustainability Reporting (BRSR) FY 24-25 SECTION A GENERAL DISCLOSURES 1. Corporate Identity Number (CIN) of the Listed Entity L67120MH2008PLC181833 2. Name of the Listed Entity L&T Finance Limited (formerly known as L&T Finance Holdings Limited) 3. Year of incorporation 2008 4. Registered office address Brindavan, Plot No. 177, C.S.T. Road, Kalina, Santacruz (East), Mumbai- 400098, Maharashtra, India 5. Corporate address Brindavan, Plot No. 177, C.S.T. Road, Kalina, Santacruz (East), Mumbai- 400098, Maharashtra, India 6. E-mail igrc@ltfs.com 7. Telephone +91 22 6212 5000 8. Website www.ltfinance.com 9. Financial year for which reporting is being done FY25 10. Name of the Stock Exchange(s) where shares are listed BSE, NSE 11. Paid-up Capital ` 24,94,86,81,010 12. Name and contact details (telephone, email address) of the person who may be contacted in case of any queries on the BRSR report Name: Apurva Rathod Telephone: 022 6212 5000 Email: igrc@ltfs.com 13. Reporting boundary Are the disclosures under this report made on a standalone basis (i.e. only for the entity) or on a consolidated basis (i.e. for the entity and all the entities which form a part of its consolidated financial statements, taken together). Disclosures in this report are made on a consolidated basis 14. Name of assurance provider BDO India Limited Liability Partnership 15. Type of assurance obtained 1) BRSR Core Reasonable Assurance 2) BRSR Select Non-Cor e Limited Assurance I. DET AILS OF THE LISTED ENTITY
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Corporate Overview Statutory Reports Financial Statements L&T Finance 317 III. OPERATIONS 18. Number of locations where plants and/or operations/offices of the entity are situated: Location Number of branches Number of offices * Total National 2,296 1 2,297 International N.A.# *Registered / Head Office #The company has no branches/operations outside India. Description of main activity Description of business activity % of turnover of the entity (FY 2024-25) Lending Retail Business Rural Business Finance • Rural Group Loans and Micro Finance (JLG) • Rural LAP Farmer Finance • Farm Equipment Finance • Agri-Allied Finance Urban Finance • Two-Wheeler Finance • Personal Loan • Home Loans and Loan Against Property SME Finance • Loans to Professionals and Traders 97% 16. Details of business activities (accounting for 90% of the turnover): II. PRODUCTS/SERVICES 17. Products/Services sold by the entity (accounting for 90% of the entity’s Turnover): Sr. No. Product/Service NIC Code % of total turnover contributed 1 Retail business contributes to 97% of the total turnover 64200 97%
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Integrated Annual Report 2024-25318 a. Number of locations Locations Number IV. EMPLOYEES a. Employees and workers (including differently abled): Sr. No. Particulars Total (A) Male Female Other No. (B) % (B / A) No. (C) % (C / A) No. (D) % (D / A) EMPLOYEES 1 Permanent (E) 36,521 34,562 95 1,959 5.4 0 0 2 Other than Permanent (F) 0 0 0 0 0 0 0 3 Total employees (E + F) 36,521 34,562 95 1,959 5.4 0 0 WORKERS: N.A. 19. Markets served by the entity: 20. Details as at the end of financial year: LTF also has its presence in 2 Union territories National (No. of states) International (No. of countries) 21 N.A. b. What is the contribution of exports as a percentage of the total turnover of the entity? • N.A. LTF is a NBFC with all operations in India and does not export internationally. c. A brief on types of customers • LTF serves the lending needs of both the urban and rural sectors and has a customer base of ~2.6 Cr • Rural customers consist of women entrepreneurs and farmers with a customer database of ~1.7 Cr and Urban customers consists of salaried/self-employed/business persons/professionals with a database of ~0.9 Cr • Rural Business Finance serves the rural individuals and rural enterprises (Rural Group Loans, Micro Finance and Micro LAP) • Farmer Finance serves the rural farmers • For urban individuals, LTF offers four products: Home Loans, LAP , Personal Loans and Two-Wheeler Finance under its Urban Business • SME Finance serves professionals and traders and other self-employed segments
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Corporate Overview Statutory Reports Financial Statements L&T Finance 319 b. Differently abled Employees and workers: Sr. No. Particulars Total (A) Male Female Other No. (B) % (B / A) No. (C) % (C / A) No. (D) % (D / A) DIFFERENTLY ABLED EMPLOYEES 1 Permanent (E) 7 7 100 0 0 0 0 2 Other than Permanent (F) 0 0 0 0 0 0 0 3 Total differently abled employees (E + F) 7 7 100 0 0 0 0 DIFFERENTLY ABLED WORKERS: N.A. Total (A) No. and percentage of Females No. (B) % (B / A) Board of Directors 7 2 29 Key Management Personnel 3 1 33 21. Participation/inclusion/representation of women Permanent Workers N.A. 22. Turnover rate for permanent employees and workers Permanent Employees Male Female Total FY 2024-25 22.0% 23.6% 22.1% FY 2023-24 25.5% 28.8% 25.6% FY 2022-23 27.7% 36.2% 28.0%
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Integrated Annual Report 2024-25320 V. HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES (INCLUDING JOINT VENTURES) VI. CSR DETAILS Complaints/Grievances on any of the principles (Principles 1 to 9) under the National Guidelines on Responsible Business Conduct: Stakeholder group from whom complaint is received Grievance redressal mechanism in place (Yes/No) (If Yes, then provide web-link for grievance redress policy) FY 2024-25 Current financial year FY 2023-24 Previous financial year Number of complaints filed during the year Number of complaints pending resolution at close of the year Remarks Number of complaints filed during the year Number of complaints pending resolution at close of the year Remarks Communities Yes (https://www.ltfinance.com/docs/default-source/ default-document-library/governance---policies--- code-2024-25/6-csr-policy_fy2022-23.pdf) 0 0 - 0 0 - Investors* (other than shareholders) Yes (https://www.ltfinance.com/grievance-redressal) 22 0 - 72 0 - 25. Transparency and Disclosures Compliances 23. (a) Names of holding / subsidiary / associate companies / joint ventures 24. Whether CSR is applicable as per section 135 of Companies Act, 2013: (Yes/No) Turnover [in `(Cr)] Net worth [in `(Cr)] 25,564.0615,940.98 Yes Sr. No. Name of the holding / subsidiary / associate companies / joint ventures (A) Indicate whether holding/ subsidiary/ associate/ joint venture % of shares held by listed entity Does the entity indicated at column A, participate in the Business Responsibility initiatives of the listed entity? (Yes/No) 1 Larsen & Toubro Limited Holding 66.24 No* 2 L&T Financial Consultants Limited Subsidiary 100 Yes 3 L&T Infra Investment Partners Trustee Private Limited Subsidiary 100 Yes 4 L&T Infra Investment Partners Advisory Private Limited Subsidiary 100 Yes 5 Grameen Capital India Private Limited Associate 26 No# *The holding company is an equity listed entity and accordingly has a separate BRSR #No significant influence as per IndAS 28 and no consolidation of accounts with LTF
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Corporate Overview Statutory Reports Financial Statements L&T Finance 321 26. Overview of the entity’ s material responsible business conduct issues Please indicate material responsible business conduct and sustainability issues pertaining to environmental and social matters that present a risk or an opportunity to your business, rationale for identifying the same, approach to adapt or mitigate the risk along-with its financial implications, as per the following format. Stakeholder group from whom complaint is received Grievance redressal mechanism in place (Yes/No) (If Yes, then provide web-link for grievance redress policy) FY 2024-25 Current financial year FY 2023-24 Previous financial year Number of complaints filed during the year Number of complaints pending resolution at close of the year Remarks Number of complaints filed during the year Number of complaints pending resolution at close of the year Remarks Shareholders Yes (https://www.ltfinance.com/contact-us/get-in- touch) 0 0 - 4 0 - Employees and workers Yes [(Code of Conduct) https://www.ltfinance.com/docs/default-source/ corporatedisclosure/code_of_conduct_for_senior_ management_and_emplyoee.pdf] 5 1** - 4 0 - Customers Yes (https://www.ltfinance.com/grievance-redressal) 16,794 773# - 27,494 767 - Value Chain Partners Yes [(Third-Party Code of Conduct) https://www.ltfinance.com/docs/default-source/ default-document-library/sutainability/policies/ third-party-code-of-conduct.pdf] 0 0 - 0 0 - Other (please specify) - - - - - - - *Holders of Non-Convertible Debentures **As on date of the issue of the Report, the pending case has been closed # As on date of the issue of the Report, the pending case has been closed Sr. No. Material issue identified 1 Legal and Regulatory Compliance 2 Corporate Governance and Ethics 3 Risk and Crisis Management 4 Innovation and Digitisation 5 Privacy and Data Security 6 Return on Equity/Return to Shareholders 7 Customer Experience and Satisfaction 8 Climate and Decarbonisation Strategy 9 Financial Inclusion Sr. No. Material issue identified 10 Sustainable and Responsible finance 11 Human Capital Development 12 Sustainable Value Chain 13 Diversity, Equity and Inclusion 14 Geopolitical Risks 15 Operational Eco-Efficiency 16 Human Rights Protection 17 Community Development Please refer the IAR FY25, section Stakeholder Engagement and Materiality Assessment for the material responsible business conduct issues and details of identified risk or/and opportunity
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Integrated Annual Report 2024-25322 SECTION B MANAGEMENT AND PROCESS DISCLOSURES Businesses should conduct and govern themselves with integrity, and in a manner that is ethical, transparent and accountable. P1 Businesses should provide goods and services in a manner that is sustainable and safe P2 Businesses should respect and promote the well-being of all employees, including those in their value chains P3 Businesses should respect the interests of and be responsive to all its stakeholders P4 Businesses should respect and promote human rights P5 Businesses should respect and make efforts to protect and restore the environment P6 Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent P7 Businesses should promote inclusive growth and equitable development P8 Businesses should engage with and provide value to their consumers in a responsible manner P9 This section is aimed at helping businesses demonstrate the structures, policies and processes put in place towards adopting the NGRBC Principles and Core Elements.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 323 Disclosure Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 Policy and management processes 1. a. Whether your entity’s policy/policies cover each principle and its core elements of the NGRBCs. (Yes/No) Y Y Y Y Y Y Y Y Y b. Has the policy been approved by the Board? (Yes/No) Yes c. Web link of the policies, if available Please refer the section Policy Compendium for accessing the policies 2. Whether the entity has translated the policy into procedures. (Yes / No) Y Y Y Y Y Y Y Y Y 3. Do the enlisted policies extend to your value chain partners? (Yes/No) Yes 4. Name of the national and international codes/certifications/labels/standards (e.g. Forest Stewardship Council, Fairtrade, Rainforest Alliance, Trustea) standards (e.g. SA 8000, OHSAS, ISO, BIS) mapped to each principle. Principle 1 ISO 20000:2018, ISO 9001:2015 Principle 2,4, 5, 7 - Principle 3 ISO 45001:2018 OHSMS Principle 6 LEED GOLD Certification, Green Certification, ISO 14064-2:2019 Principle 8 ISO 26000:2010 Principle 9 ISO 27001:2013 5. Specific commitments, goals and targets set by the entity with defined timelines, if any. Y Y Y Y Y Y Y Y Y 6. Performance of the entity against the specific commitments, goals and targets along-with reasons in case the same are not met. Target met Target met Target met Target met Target met Target met Target met Target met Target met Governance, leadership and oversight 7. Statement by director responsible for the business responsibility report, highlighting ESG related challenges, targets and achievements (listed entity has flexibility regarding the placement of this disclosure) “As a responsible business, the Company is leading the charge in Environmental, Social, and Governance (ESG) responsibility and has contributed towards reducing its carbon footprint by reducing the Greenhouse Gas (GHG) emissions while increasing reliance on renewable energy in operations. I am proud to share that the Company is well on track to meet its Carbon Neutrality by 2035 goal. By embracing green power and green attributes, your Company has avoided approximately ~3,692 tCO2e in carbon emissions. The EV financing initiative further prevented an additional ~12,675.67 tCO2e emissions, contributing significantly to a cleaner future. We have remained Water Positive / Surplus since the last three years. LTF’s commitment to strong governance is reflected in the board composition: over 50% independent Directors, half of whom are women, with all statutory committees (where legally permissible) chaired by independent Directors. We conducted an inaugural Double Materiality Assessment, engaging internal and external stakeholders to identify 17 key material topics, achieving exceptional response rates. A first-ever Business Impact study using the ‘True Value Methodology’ evaluated our portfolio’s environmental, economic and societal impact. Becoming a ‘Partnership for Carbon Accounting Financials (PCAF) signatory, we are committed to transparent Financed emissions reporting. Achieving ISO 45001:2018 certification for LTF’s head office underscores Company’s focus on workplace safety. We reinforced Diversity, Equity, and Inclusion (DEI) through mandatory, gamified modules, translated into multiple languages, and rolled out across management levels. On the CSR front, the flagship ‘Digital Sakhi’ project has empowered over 1,110 Digital Sakhis, who in turn have positively impacted over 14.20 lakh individuals and upskilled more than 10,500 women entrepreneurs. The other key initiative, the ‘Jalvaibhav’ project, is actively replenishing water resources and promoting climate-smart agriculture. Through ‘Project Prakruti’, your Company has partnered with farmers to plant over 1 lakh horticulture saplings, empowering over 100 small and marginal farmers to increase their income through diversified cropping. Beyond these initiatives, we are actively involved in disaster relief, mitigating the impact of natural calamities like floods.
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Integrated Annual Report 2024-25324 Disclosure Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 Considering the current environmental scenario, sustainability has become imperative for any organisation, irrespective of the sector it is operating in. NBFCs can play a crucial role in promoting sustainable practices while lending. We secured ` 20,480 Cr Sustainability focussed and Priority lending Loans and 50% of the Company’s loan book is from low-income states - thus promoting equitable development. Going forward we intend to focus on financing sustainable practices for retail customers.” 8. Details of the highest authority responsible for implementation and oversight of the Business Responsibility policy/policies Sudipta Roy Managing Director and Chief Executive Officer 9. Does the entity have a specified Committee of the Board/ Director responsible for decision making on sustainability related issues? (Yes / No). If yes, provide details. Yes, CSR and ESG Committee The role of the Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG) Committee is crucial in ensuring that your Company operates in a responsible and sustainable manner. In accordance with Section 135 of the Companies Act, 2013, the Board has constituted this Committee to guide and oversee the direction of CSR and ESG initiatives. One of the key responsibilities of the CSR and ESG Committee is to review the CSR and ESG policies. Additionally, the progress made towards achieving sustainability/ESG and CSR goals are also placed before the Committee. Name of the Committee Member Designation Nature of Directorship Rajani R. Gupte Chairperson Independent Director Sudipta Roy Member Managing Director and Chief Executive Officer R. Seetharaman Member Independent Director 10. Details of review of NGRBCs by the Company: Subject for review Indicate whether review was undertaken by Director / Committee of the Board/ Any other Committee Frequency (Annually/ half yearly/quarterly/any other – please specify) P1 P2 P3 P4 P5 P6 P7 P8 P9 P1 P2 P3 P4 P5 P6 P7 P8 P9 Performanceagainst above policies and follow up action The Board and its sub-committees provide oversight on the implementation of all the different business responsibility and ESG policies of the Company. Long range plans and annual goals are set in light of the policies. Progress updates on these goals are updated to the board during quarterly board meetings and sub-committee meetings. Further, the progress and achievements are also discussed in the internal newsletter disseminated to Directors and employees. In case of Board suggestions, respective departments carry out the necessary actions and update the Board. Compliance with statutory requirements of relevance to the principles, and, rectification of any non- compliances The Company complies with the extant regulations and principles as are applicable. Except for the penalties mentioned (Principle 1 Essential Indicator 2), there were no material non- compliances with respect to statutory / regulatory requirements.
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12. If answer to question (1) above is “No” i.e. not all Principles are covered by a policy, reasons to be stated: N.A. Corporate Overview Statutory Reports Financial Statements L&T Finance 325 P1 P2 P3 P4 P5 P6 P7 P8 P9 11. Has the entity carried out independent assessment/ evaluation of the working of its policies by an external agency? (Yes/No). If yes, provide name of the agency. Y Y Y Y Y Y Y Y Y LTF has an Internal Audit team which periodically audits the policies and processes with the help of external auditors. Third-Party Code of Conduct policy was reviewed by external expert/consultant. This section is aimed at helping entities demonstrate their performance in integrating the Principles and Core Elements with key processes and decisions. The information sought is categorized as “Essential” and “Leadership”. While the essential indicators are expected to be disclosed by every entity that is mandated to file this report, the leadership indicators may be voluntarily disclosed by entities which aspire to progress to a higher level in their quest to be socially, environmentally, and ethically responsible. Businesses should conduct and govern themselves with integrity, and in a manner that is Ethical, Transparent and Accountable. 1. Percentage coverage by training and awareness programmes on any of the principles during the financial year: Segment Total number of training and awareness programmes held Topics / principles covered under the training and its impact %age of persons in respective category covered by the awareness programmes Board of Directors 7 1) Macro environment 2) Industry outlook 3) IT, Data Analytics and Digital 4) Information and Security Awareness 5) ESG 6) Marketing strategies 7) Risk management 100 1 1) AI bootcamp (for Independent Directors) 100 SECTION C PRINCIPLE WISE PERFORMANCE DISCLOSURE PRINCIPLE 1 Essential Indicators
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2. Details of fines / penalties /punishment/ award/ compounding fees/ settlement amount paid in proceedings (by the entity or by directors / KMPs) with regulators/ law enforcement agencies/judicial institutions, in the financial year, in the following format (Note: the entity shall make disclosures on the basis of materiality as specified in Regulation 30 of SEBI (Listing Obligations and Disclosure Obligations) Regulations, 2015 and as disclosed on the entity’s website): Integrated Annual Report 2024-25326 Segment Total number of training and awareness programmes held Topics / principles covered under the training and its impact %age of persons in respective category covered by the awareness programmes Key Managerial Personnel 16 1) Macro environment 2) Industry outlook 3) IT, Data Analytics and Digital 4) Information and Security Awareness 5) ESG 6) Marketing strategies 7) Risk management 8) KYC AML 9) Prevention of sexual harassment 10) Code of Conduct 11) Vigil Mechanism 12) Human Rights 13) Insider trading & securities dealing code 14) AI Bootcamp 100 Employees other than BoD and KMPs 2,773 1) KYC AML 2) Prevention of sexual harassment 3) Code of Conduct 4) Vigil Mechanism 5) Human Rights 6) Insider trading & securities dealing code 7) Information and Security Awareness 8) ESG 100* Workers N.A. *Total number of training and awareness sessions have been considered based on the headcount as on December 31st, 2024 Monetary NGRBC Principle Name of the regulatory/ enforcement agencies/ judicial institutions Amount (in `) Brief of the case Has an appeal been preferred? (Yes/No) Penalty/ Fine Principle 1 Department Goods and Service Tax, Government of Rajasthan 34,616 Discrepancy in Outward Tax in GSTR-1 compared to GSTR-9 Yes Penalty/ Fine Principle 1 Department of Goods and Service Tax, Government Of Delhi 69,030 Discrepancy in ITC availment in GSTR- 3B as compared to GSTR-2A Yes
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Corporate Overview Statutory Reports Financial Statements L&T Finance 327 Monetary NGRBC Principle Name of the regulatory/ enforcement agencies/ judicial institutions Amount (in `) Brief of the case Has an appeal been preferred? (Yes/No) Penalty/ Fine Principle 1 Department of Goods and Service Tax, Government of Karnataka 3,81,206 1) Short payment of GST in comparison to liability declared in GSTR-1 and paid in GSTR-3B / Delay of Reporting of Invoices. 2) Excess availment of ITC in GSTR-3B as compared to Input Tax Credit (“ITC”) available in GSTR2A 3) Irregular ITC availed on supplies received from suppliers who have filed GSTR-1 beyond the due date Yes Penalty/ Fine Principle 1 Department of Goods and Service Tax, Government of Maharashtra 76,13,247 1) Excess outward tax in GSTR 9 as compared to GSTR 3B 2) Excess claim of ITC / ITC on Registration Cancelled Suppliers / Non-Filers 3) Claim of blocked credit as per Section 17(5) of the Central Goods and Service Tax Act, 2017 4) Non-payment of GST under reverse charge mechanism 5) Credit Note difference (GSTR1 vs GSTR9) Yes Penalty/ Fine Principle 1 Department of Goods and Service Tax, Government of Uttar Pradesh 10,000 Input Tax Credit Mismatch Yes Penalty/ Fine Principle 1 Deputy Commissioner of State Tax, Office of the Joint Commissioner of State Tax, Patna Special, Central Bihar, Bihar 11,78,985.63 1) Tax demand erroneously levied on exempt interest 2) Discrepancy in ITC availment in GSTR-3B as compared to GSTR- 2A Yes Penalty/ Fine Principle 1 Deputy Commissioner of State Tax, Guwahati, Assam 2,42,396 Under declaration of Output Tax Yes
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Integrated Annual Report 2024-25328 Monetary NGRBC Principle Name of the regulatory/ enforcement agencies/ judicial institutions Amount (in `) Brief of the case Has an appeal been preferred? (Yes/No) Penalty/ Fine Principle 1 Deputy Commissioner, State Tax Department, Sector 21, Lucknow (C), Uttar Pradesh 15,09,267.94 1) ITC reversal on Cross Charge 2) Tax on Exempt / Nil Rated Supply 3) Credit Notes Adjustment Yes Penalty/ Fine Principle 1 Department of Goods and Service Tax, Government of Tamil Nadu 30,000 Input Tax Credit Mismatch No Appeal Filed Penalty/ Fine Principle 1 Department of Goods and Service Tax, Government of Tamil Nadu 40,000 Mismatch in taxpaid and Input tax Credit claimed under RCM Yes Penalty/ Fine Principle 1 Office of Principal Commissioner, CGST and Central Excise, Government of Madhya Pradesh 4,14,322 1) Treatment of Credit notes 2) In-eligible ITC 3) Excess availment of ITC Yes Penalty/ Fine Principle 1 Deputy Commissioner of State Tax, Department of Goods and Service Tax, Government of Maharashtra 8,64,236 1) Excess claim of Input Tax Credit; 2) Claim of Input Tax Credit on RC cancelled suppliers 3) Claim of Input Tax Credit on GSTR-3B non-filers 4) Claim of Input Tax Credit on GSTR-1 non-filers 5) Claim of ineligible Input tax credit 6) ITC availed after date of availment 7) Disallowance of credit note Yes Penalty/ Fine Principle 1 Deputy Commissioner of State Tax, Sector 1, Dehradun, Uttarakhand - 248001 35,345 Excess claim of Input Tax Credit Yes
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Corporate Overview Statutory Reports Financial Statements L&T Finance 329 Monetary NGRBC Principle Name of the regulatory/ enforcement agencies/ judicial institutions Amount (in `) Brief of the case Has an appeal been preferred? (Yes/No) Penalty/ Fine Principle 1 Deputy Commissioner of State Tax, Special Circle, Patna, Bihar 28,73,927.88 1) Excess claim of Input Tax Credit 2) Turnover related adjustments in GSTR9 3) Erroneous additions on reverse charge liability and other expenses Yes Penalty/ Fine Principle 1 Department of Goods and Service Tax, Government of Delhi 7,17,185 1) Mismatch in Input Tax Credit 2) Proportionate reversal of ITC against exempt Income 3) Ineligible ITC Yes Penalty/ Fine Principle 1 Department of Goods and Service Tax, Government of Delhi 15,34,727 1) Mismatch in Input Tax Credit 2) Proportionate reversal of ITC against exempt Income 3) Ineligible ITC Yes Penalty/ Fine Principle 1 Department of Goods and Service Tax, Government of Tamil Nadu 40,000 Ineligible Input Tax Credit No Appeal filed Penalty/ Fine Principle 1 Deputy Commissioner of State Tax, Mulund West 505, Mumbai North East, Maharashtra 87,35,613 1. Excess claim of Input Tax Credit 2. Short Payment of Output Tax Liability 3. Short Payment of Reverse Charge Liability Yes
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Non-Monetary NGRBC Principle Name of the regulatory/ enforcement agencies/ judicial institutions Brief of the case Has an appeal been preferred? (Yes/No) Imprisonment 0 0 0 No Punishment 0 0 0 No Integrated Annual Report 2024-25330 Monetary NGRBC Principle Name of the regulatory/ enforcement agencies/ judicial institutions Amount (in `) Brief of the case Has an appeal been preferred? (Yes/No) Penalty/ Fine Principle 1 Additional Commissioner, CGST and C.EX., Palghar Commissionerate, Office of the Commissioner of CGST, Palghar, 5th floor, Plot No. C-24, Sector-E, Central GST Bhavan, Bandra-Kurla Complex, Bandra (East), Mumbai-400 051 112,01,85,000 In the course of its retail lending business, the Company leveraged its vast pan India network (i.e. branches, meeting centres and Dealers/DSA network and other touch points) to provide marketing and brand promotion support services to promote various insurance products for a service fee consideration. Such activity is an integral part of the loan sourcing activity carried out by the Company’s network across India. The Company has duly paid applicable GST on such service fees consideration. In respect of such services, the Company has received a penalty demand order from Additional Commissioner, CGST and C.EX., Palghar Commissionerate, Office of the Commissioner of CGST, Palghar stating that the Company has allegedly raised invoices without actual rendering of services. Yes Penalty/ Fine Principle 1 Assistant Commissioner of CGST and Central Excise, Egmore Division- Chennai North Commissionerate, Tamil Nadu 98,69,045 1. Short Payment of Output Tax Liability; 2. Non-reversal of ITC against Credit notes reflecting in Form 2A; 3. Excess claim of Input Tax Credit; 4. Non reversal of Ineligible GST Input tax credit. Yes Settlement N.A. N.A. N.A. N.A. N.A. Compounding fee N.A. N.A. N.A. N.A. N.A.
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5. Number of Directors/KMPs/employees/workers against whom disciplinary action was taken by any law enforcement agency for the charges of bribery/ corruption. FY 2024-25 Current financial year FY 2023-24 Previous financial year Directors 0 0 KMPs 0 0 Employees 0 0 Workers N.A. N.A. 4. Does the entity have an anti-corruption or anti-bribery policy? If yes, provide details in brief and if available, provide a web-link to the policy. Yes. The anti-corruption policy adopted by the Company addresses in detail and effectuates the Company’s commitment to comply with laws, rules and regulations relating to interactions with Government officials with respect to the Company’s business and details certain provisions of the Company’s Code of Conduct. This policy does not prohibit interactions with Government officials; rather, it forbids corrupt interactions. Purpose of the policy is to help the Company’s employees identify and avoid situations that could potentially violate anti-bribery and anti-corruption laws or create any appearance of impropriety. This policy is applicable to all Directors, officers, and employees, as well as all outside parties acting on behalf of the Company in India as well as in foreign jurisdiction, including but not limited to, contract workers, agents and intermediaries, consultants, representatives, distributors, teaming partners, contractors and suppliers, consortia, and joint venture partners. Please refer the section Policy Compendium for accessing the policy. 3. Of the instances disclosed in Question 2 above, details of the Appeal/ Revision preferred in cases where monetary or non-monetary action has been appealed. Case Details Name of the regulatory/ enforcement agencies/ judicial institutions In terms of the instances wherein appeal has been referred to as disclosed in question 2 above, the necessary appeals have been filed with the respective state GST Appellate Authorities. 6. Details of complaints with regard to conflict of interest: FY 2024-25 Current financial year FY 2023-24 Previous financial year Number Remarks Number Remarks Number of complaints received in relation to issues of conflict of interest of the Directors 0 - 0 - Number of complaints received in relation to issues of conflict of interest of the KMPs 0 - 0 - Corporate Overview Statutory Reports Financial Statements L&T Finance 331
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8. Number of days of accounts payables ((Accounts payable *365) / Cost of goods/services procured) in the following format: FY 2024-25 Current financial year FY 2023-24 Previous financial year Number of days of accounts payables 4.18 3.88 7. Provide details of any corrective action taken or underway on issues related to fines / penalties /action taken by regulators/ law enforcement agencies/ judicial institutions, on cases of corruption and conflicts of interest. N.A. There are no regulatory directions against LTF and/ or pendency of proceeding pertaining to anti-competition law to the best of our knowledge. Integrated Annual Report 2024-25332 9. Open-ness of business Provide details of concentration of purchases and sales with trading houses, dealers, and related parties along- with loans and advances and investments, with related parties, in the following format: Metrics FY 2024-25 Current financial year FY 2023-24 Previous financial year Concentration of purchases a. Purchases from trading houses as % of total purchases -b. Number of trading houses where purchases are made from c. Purchases from top 10 trading houses as % of total purchases from trading houses Concentration of sales a. Sales to dealers/distributors as % of total sales N.A.* b. Number of dealers/distributors to whom sales are made c. Sales to top 10 dealers/distributors as % of total sales to dealers/distributors Share of RPTs in a. Purchases (Purchases with related parties/Total Purchases) 6.57 6.88 b. Sales (Sales to related parties/Total Sales) 0 0 c. Loans and advances (Loans and advances given to related parties/Total loans and advances) 0 0 d. Investments (Investments in related parties/Total Investments made) 0 0 *We have over 13,000+ distribution touch points through which we distribute our financial services products wherein customers who come to purchase farm equipment or two-wheeler may choose our services. These includes authorised dealers of farm and two - wheeler OEMs with whom we have tie-ups wherein we are present in their dealerships as a financier. Similarly, for our Personal Loans and Home Loans business, we have tie-ups with Direct Selling Agents (‘DSA’) and developers through which customers may choose to avail home loans, loan against property, personal loans and SME finance. However, all loans are disbursed directly by LTF and these tie ups with DSAs and developers are customer touchpoints only. Therefore, this performance indicator is not applicable in case of our business model.
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1. Awareness programmes conducted for value chain partners on any of the principles during the financial year: Total number of awareness programmes held Topics / principles covered under the training %age of value chain partners covered (by value of business done with such partners) under the awareness programmes 1 All 9 principles >75 As part of the signing of the Third-Party Code of Conduct, since FY22 all vendors are made aware of LTF’s ESG requirements and ESG and sustainability-related policies that they need to adhere to and abide by. LTF finalised a Value Chain ESG Assessment framework in FY24 and rolled out the assessment covering >75% of its value chain partners (upstream and downstream) and continued with the same framework for FY25. As part of the framework, awareness sessions were organised for value chain partners in FY24. Incrementally, in FY25, LTF conducted its 1st ever value chain connect on ESG, to share best practices on ESG with participation of top banks, vendor and even investors from LTF’s value chain. 2. Does the entity have processes in place to avoid/ manage conflict of interests involving members of the Board? (Yes/No) If Yes, provide details of the same. Yes As per our Code of Conduct applicable to Non-Executive Directors, the Directors cannot be involved in a situation in which they may have a direct or indirect interest that conflicts or possibly may conflict with the interest of the Company. The Company follows the principle of ‘no conflict of interest’ while inducting a Director on its Board and strives to maintain the same throughout the Board member’s tenure. Corporate Overview Statutory Reports Financial Statements L&T Finance 333 Leadership Indicators Businesses should provide goods and services in a manner that is sustainable and safe 1. Percentage of R&D and capital expenditure (capex) investments in specific technologies to improve the environmental and social impacts of product and processes to total R&D and capex investments made by the entity, respectively. FY 2024-25 Current financial year FY 2023-24 Previous financial year Details of improvements in environmental and social impacts R&D - - - Capex - - - Given the nature of business, LTF does not have dedicated budget for R&D. In FY 2024-25, LTF has invested Rs. 26.02 Cr on its Project Cyclops. Project Cyclops is a proprietary, AI-ML-based credit engine that offers deep customer insights by analyzing bureau data, account aggregators, and alternate trust signals. This triad approach gives a nuanced understanding of potential borrowers, enabling more accurate credit underwriting and superior portfolio quality. The ensemble scorecards developed are based on historical credit performance across multiple data axes. Since its launch for two-wheeler loans in June, Project Cyclops has significantly reduced delinquencies and improved efficiency. Through Project Cyclops, LTF aims to further improve its credit offerings significantly. PRINCIPLE 2 Essential Indicators
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2. a. Does the entity have procedures in place for sustainable sourcing? (Yes/No) Yes b. If yes, what percentage of inputs were sourced sustainably? 0.1% 3. Describe the processes in place to safely reclaim your products for reusing, recycling and disposing at the end of life, for (a) Plastics (including packaging) (b) E-waste (c) Hazardous waste and (d) other waste. 1) LTF is a Non-banking Financial Company (NBFC) and provides financial services. We do not manufacture any product which needs to be reclaimed for reusing, recycling and disposing at the end of life. Moreover, the Company recycles all the e-waste generated through an authorised recycler. 2) LTF has taken up and achieved the target of Zero-Single use plastic at its corporate office and uses steel bins instead of plastic bins for disposal of food waste and waste generated by employees. Also, through awareness on recycling of waste, segregation of waste, LTF encourages sustainable ways of handling its waste and has appointed a certified waste segregator at head office as part of its action towards zero waste to landfill. 3) Additionally, in FY25, LTF conducted its maiden waste management study covering top 50 branches, leading to enhanced disclosures and practices. The study also helped identify recommendations for further improving the waste management practices. 4. Whether Extended Producer Responsibility (EPR) is applicable to the entity’s activities (Yes / No). No If yes, whether the waste collection plan is in line with the Extended Producer Responsibility (EPR) plan submitted to Pollution Control Boards? If not, provide steps taken to address the same. Integrated Annual Report 2024-25334 2. If there are any significant social or environmental concerns and/or risks arising from production or disposal of your products / services, as identified in the Life Cycle Perspective / Assessments (LCA) or through any other means, briefly describe the same along-with action taken to mitigate the same. Name of product / service Description of the risk / concern Action taken N.A. N.A. N.A. 1. Has the entity conducted Life Cycle Perspective / Assessments (LCA) for any of its products (for manufacturing industry) or for its services (for service industry)? If yes, provide details in the following format? NIC Code Name of Product / Service % of total Turnover contributed Boundary for which the Life Cycle Perspective / Assessment was conducted Whether conducted by independent external agency (Yes/No) Results communicated in public domain (Yes/No) If yes, provide the web-link. No *LTF has undertaken estimation of its financed emissions on select portfolios in FY24 and FY25. However, LTF intends to evaluate a comprehensive LCA for its services when material and feasible. Leadership Indicators
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Corporate Overview Statutory Reports Financial Statements L&T Finance 335 3. Percentage of recycled or reused input material to total material (by value) used in production (for manufacturing industry) or providing services (for service industry). *Percentage of A4 recycled paper used in LTF’s business operations, mainly desktop and partly business stationery. Business stationery which is required to be preserved as per regulatory guidelines is excluded. Indicate input material Recycled or re-used input material to total material FY 2024-25 Current financial year FY 2023-24 Previous financial year Recycled paper* 87% 79% 4. Of the products and packaging reclaimed at end of life of products, amount (in metric tonnes) reused, recycled, and safely disposed of. N.A. LTF is a Non-banking Financial Company (NBFC) and provides financial services. We do not manufacture any product which needs to be safely reclaimed for reusing, recycling and disposing at the end of life. 5. Reclaimed products and their packaging materials (as percentage of products sold) for each product category. N.A. Businesses should respect and promote the well-being of all employees, including those in their value chains 1. a. Details of measures for the well-being of employees. % of employees covered by Category Total (A) Health insurance Accident insurance Maternity benefits Paternity Benefits Day Care facilities Number (B) % (B / A) Number (C) % (C / A) Number (D) % (D / A) Number (E) % (E / A) Number (F) % (F / A) Permanent employees Male 34,562 34,562 100 34,562 100 0 0 34,562 100 0 0 Female 1,959 1,959 100 1,959 100 1,959 100 0 0 0 0 Other 0 0 0 0 0 0 0 0 0 0 0 Total 36,521 36,521 100 36,521 100 1,959 5 34,562 95 0 0 Other than Permanent employees - 0 PRINCIPLE 3 Essential Indicators
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Integrated Annual Report 2024-25336 b. Details of measur es for the well-being of workers: N.A. 3. Accessibility of workplaces Ar e the premises / offices of the entity accessible to differently abled employees and workers, as per the requirements of the Rights of Persons with Disabilities Act, 2016? If not, whether any steps are being taken by the entity in this regard. Y es. Necessary arrangements have been made at the corporate office and one branch in Kolkata to provide access to differently abled employees, as per the requirements of the Rights of Persons with Disabilities Act, 2016. Also, LTF has put in place an ESG due diligence process for opening of new branches, which also checks whether there are provisions regarding accessibility by PWDs. Moreover, LTF has adopted a sustainability target to improve workplace accessibility for Persons with Disability (PwDs) for all large offices and major branches by FY29. 4. Does the entity have an equal opportunity policy as per the Rights of Persons with Disabilities Act, 2016? If so, provide a web-link to the policy. Yes The policy is available at: https://www .ltfinance.com/docs/default-source/default-document-library/sutainability/ policies/human-rights-policy.pdf 2. Details of r etirement benefits. Benefits FY 2024-25 Current financial year FY 2023-24 Previous financial year No. of employees covered as a % of total employees No. of workers covered as a % of total workers Deducted and deposited with the authority (Y/N/N.A.) No. of employees covered as a % of total employees No. of workers covered as a % of total workers Deducted and deposited with the authority (Y/N/N.A.) PF 100 N.A. Y 100 N.A. Y Gratuity 100 N.A. Y 100 N.A. Y ESI 63 N.A. Y 67 N.A. Y Others – please specify - c. Spending on measur es towards well-being of employees and workers (including permanent and other than permanent) in the following format FY 2024-25 Current financial year FY 2023-24 Previous financial year Cost incurred on well-being measures as a % of total revenue of the company 0.26* 0.24* *Well-being measures spent is calculated in line with Industry Standard Note on BRSR Core reporting standard. The number for FY 2023-24 is also revised accordingly. Earlier reported spent was 0.40%
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Corporate Overview Statutory Reports Financial Statements L&T Finance 337 5. Retur n to work and retention rates of permanent employees and workers that took parental leave. Gender Permanent employees Permanent workers Return to work rate Retention rate Return to work rate Retention rate Male 100 82 N.A. Female 96 37 Other - - Total 99 59 6. Is ther e a mechanism available to receive and redress grievances for the following categories of employees and workers? If yes, give details of the mechanism in brief. (If yes, then give details of the mechanism in brief) Permanent Workers N.A. Other than Permanent Workers N.A. Permanent Employees Yes Other than Permanent Employees - Employees can address their complaints and grievances through multiple channels. Employees can report any breach of Code of Conduct by sending an email to code@ltfs.com. The Code of Conduct committee comprises of senior Company officials, who investigate the complaints thoroughly. Incidents of sexual harassment can be reported by sending an email to wecare@ ltfs.com. The Internal Committee, which consists of senior Company officials/leaders, conducts appropriate investigation into the complaints as per the POSH policy. Any unethical conduct or any action that is against LTF’s interests can be reported by sending an email to whistleblower@ltfs.com. The Company strives to ensure speedy resolution of grievances through various channels and ensuring confidentiality. 7. Membership of employees and worker in association(s) or Unions r ecognised by the listed entity: N.A. LTF does not have any employee associations. However, LTF respects the right to freedom of association and does not discourage collective bargaining. 8. Details of training given to employees and workers: Category FY 2024-25 Current financial year FY 2023-24 Previous financial year Total* (A) On Health and safety measures On Skill upgradation Total (D) On Health and safety measures On Skill upgradation No. (B) % (B / A) No. (C) % (C/A) No. (E) % (E / D) No. (F) % (F / D) Employees Male 34,562 33,451 97 30,245 88 29,143 28,041 96 28,414 97 Female 1,959 1,883 96 1,660 85 1,391 1,315 95 1,322 95 Other 0 0 0 0 0 - - - - - Total 36,521 35,334 97 31,905 87 30,534 29,536 96 29,736 97 Workers - N.A.
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Integrated Annual Report 2024-25338 9. Details of performance and career development reviews of employees and worker: Category FY 2024-25 Current financial year FY 2023-24 Previous financial year Total (A) No. (B) % (B/A) Total (C) No. (D) % (D / C) Employees Male 34,562 29,498 85.35 29,143 24,997 85.77 Female 1,959 1,591 81.21 1,391 1,189 85.48 Other - - - - - - Total 36,521 31,089 85.13 30,534 26,186 85.76 Workers - N.A. 10. Health and safety management system: a. Whether an occupational health and safety management system has been implemented by the entity? (Yes/ No). If yes, what is the coverage of such a system? Yes LTF’s Health and Safety policy has been approved by the Board and CSR and ESG Committee. The policy is applicable to all LTF offices and branches. In FY25, head office of LTF was certified with ISO 45001:2018 Standard on Occupational Health and Safety Management System (OHSMS). Various other health and safety initiatives and measures have been implemented for all employees in accordance with the policy, such as, Stepathon, awareness on mental and physical health, awareness campaigns about LTF’s health and safety programmes and benefits. LTF also sets goals to strengthen its health and safety procedures. A road safety element was also incorporated into the daily pledge of the frontline employees, to upheld the best practices of health and safety. For new hires, dedicated training on road safety during their induction is carried out. Helmets were also distributed to frontline officers as safety gears at multiple locations PAN India. LTF is also a signatory to the WASH initiative. Regular monitoring and review of all safety appliances, such as firefighting equipment and artificial defibrillators, is conducted, on a regular basis. In addition to various initiatives, in FY25, LTF conducted Hazard Identification and Risk Assessment study across 25 branches, covering head office and branches in all four zones. The purpose of conducting HIRA was to identify potential hazards and risks related to it and provide control measures to abate identified hazards and risks. b. What are the processes used to identify work-related hazards and assess risks on a routine and non- routine basis by the entity? Being complaint with ISO 45001:2018 certification for its head office, LTF conducted training on ISO 45001:2018, with different stakeholders at head office. The trained employees further carried out internal audits related to occupational health and safety. LTF also has an OHS manual in place validated by external expert. In FY25, LTF continued to conduct Hazard Identification and Risk Assessment study noting down potential hazards as observations in the set template. A total of 25 samples sites, head office and branches across all 4 zones, pan India were covered under the Hazard Identification and Risk Assessment (“HIRA”). LTF has put in place an ESG framework/checklist for opening of new branches including points to identify work related hazards and risk. LTF ensures that the workplace is designed with the health and safety of its employees in mind. c. Whether you have processes for workers to report the work-related hazards and to remove themselves from such risks. N.A.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 339 d. Do the employees/ workers of the entity have access to non-occupational medical and healthcare services? Yes 11. Details of safety related incidents, in the following format: Safety Incident/Number Category FY 2024-25* Current financial year FY 2023-24* Previous financial year Lost Time Injury Frequency Rate (LTIFR) (per one million-person hours worked) Employees - 0 Workers N.A. N.A. Total recordable work-related injuries Employees - 0 Workers N.A. N.A. No. of fatalities Employees 0 0 Workers N.A. N.A. High consequence work-related injury or ill-health (excluding fatalities) Employees 0 0 Workers N.A. N.A. * Data pertains to LTF premises 12. Describe the measures taken by the entity to ensure a safe and healthy workplace. Various health and safety initiatives are implemented across locations. LTF has conducted HIRA study to identify potential hazards and risks related to it and provide control measures to abate the hazards and risk pertaining to them. LTF has also conducted training on ISO 45001:2018, with different stakeholders at head office. All branches are equipped with regularly monitored and refilled fire extinguishers. Emergency mock drills are conducted across major branches to create awareness amongst employees in case of an emergency. In FY25, the Company conducted 32 fire mock drills in case of emergency evacuation at head office and major branches, covering all 4 zones, pan India. Also at head office, a UVC Nanotechnology AC system has been installed to provide a safe and germ-free working environment for employees. Awareness is spread on wellbeing and mental wellbeing of individual employees. All employees of LTF are also benefited by 24x7 doctors and ambulance on-call services through its dedicated mobile based application. Both periodic maintenance and unforeseen inspections are carried out to guarantee that every location is kept up to date and safe from any mishaps. Additionally, helmets are provided to frontline employees as safety gears and as a preventive measure. Experts in both road safety and EMI collection safety train new hires. A method for safely collecting EMI has been created. In order to promote proper posture and working circumstances, ergonomic seats and furniture are provided. Employee health, including that of their families, is taken into consideration in addition to physical safety. Medical insurance is provided by the Company to all employees and their dependents.
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Integrated Annual Report 2024-25340 13. Number of complaints on the following made by employees and workers FY 2024-25 Current financial year FY 2023-24 Previous financial year Filed during the year Pending resolution at the end of year Remarks Filed during the year Pending resolution at the end of year Remarks Working Conditions 0 0 - 0 0 - Health and Safety 0 0 - 0 0 - 15. Provide details of any corrective action taken or underway to address safety-related incidents (if any) and on significant risks / concerns arising from assessments of health and safety practices and working conditions. There were no corrective actions taken for FY25. Further, the Company is in compliance with ISO 45001:2018 certification for its head office. For other premises the Company has been following standard operating procedures so as to comply with state/local level extant regulations and ensures safety and hygiene protocols. Necessary safety practices are being followed by employees, customers and other visitors on Company premises. 14. Assessments for the year % of your plants and offices that were assessed (by entity or statutory authorities or third parties) Health and safety practices 1* Working Conditions 1 *Calculated basis number of branches as on March 31, 2025 1. Does the entity extend any life insurance or any compensatory package in the event of death of (A) Employees (Y/N) (B) Workers (Y/N). Employees- Yes Workers- N.A. 2. Provide the measures undertaken by the entity to ensure that statutory dues have been deducted and deposited by the value chain partners. LTF has implemented a Third-party Code of Conduct since FY22. The code establishes standards and sets expectations from its value chain partners with regards to terms of ethical and responsible business practices and conduct, including inter-alia statutory compliance, governance, sustainable sourcing, environmental stewardship and socially sustainable practices. Thus, through awareness and necessary certifications, LTF ensures that statutory dues have been deducted and deposited by the value chain partners. Leadership Indicators
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5. Details on assessment of value chain partners: LTF has finalised a value chain ESG assessment framework and rolled out the assessment covering >75% of its value chain in FY 24 and FY25. Building on its engagement of successfully conducting its 1st ever ESG connect amongst its value chain partners, LTF also aims to create awareness on Human Rights with its value chain. % of value chain partners (by value of business done with such partners) that were assessed Health and safety conditions >75 Working conditions >75 Businesses should respect the interests of and be responsive to all its stakeholders Essential Indicators PRINCIPLE 4 1. Describe the processes for identifying key stakeholder groups of the entity. LTF believes in partnering with its various stakeholders to build shared value and uses a structured approach of stakeholder identification. The Company’s stakeholders include both individuals and organisations, within and outside the Company, who are significantly impacted by its business operations. LTF’s ongoing engagements are designed to determine the needs and priorities of stakeholders, communicate the Company’s efforts to fulfil their expectations, and provide speedy resolution of grievances. LTF uses a variety of structured engagement channels to gain insights into stakeholder views and concerns. Corporate Overview Statutory Reports Financial Statements L&T Finance 341 3. Provide the number of employees / workers having suffered high consequence work related injury / ill-health / fatalities (as reported in Q11 of Essential Indicators above), who have been rehabilitated and placed in suitable employment or whose family members have been placed in suitable employment: Total no. of affected employees/ workers No. of employees/workers that are rehabilitated and placed in suitable employment or whose family members have been placed in suitable employment FY 2024-25 Current financial year FY 2023-24 Previous financial year FY 2024-25 Current financial year FY 2023-24 Previous financial year Employees 0 0 0 0 Workers N.A. N.A. N.A. N.A. 4. Does the entity provide transition assistance programs to facilitate continued employability and the management of career endings resulting from retirement or termination of employment? (Yes/ No) No 6. Provide details of any corrective actions taken or underway to address significant risks / concerns arising from assessments of health and safety practices and working conditions of value chain partners. No corrective action was necessitated.
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2. List stakeholder groups identified as key for your entity and the frequency of engagement with each stakeholder group. Stakeholder Group Whether identified as vulnerable & marginalized group (Yes/No) Channels of communication (Email, SMS, newspaper, pamphlets, advertisement, community meetings, notice board, website), Other Frequency of engagement (Annually/ half yearly/ quarterly / others – please specify) Purpose and scope of engagement including key topics and concerns raised during such engagement Employees No E-mail, intranet, website, podcasts, radio, WhatsApp, Town Halls, Employee Survey, One-on- One / Skip-level discussions with Managers and Human Resource Engagement events, 270 degree feedback for business leaders and above Monthly Quarterly Half yearly Annualy Need based a) Talent management b) Employee engagement c) Learning and development d) Productivity e) Work-life balance f) Staff welfare g) Health and Safety h) Remuneration and employee benefits Investors No Website, Quarterly Investor presentations, Quarterly Investor calls, Investor meetings, Non- Deal Roadshows (NDR), Integrated Annual Report Monthly (except during specified silent periods) Quarterly Annualy a) Market outlook b) Business strategy and updates c) Operational efficiency d) Long-term business performance e) ESG risks and opportunities in business f) Technology in business Regulators No E-mail, Physical filing As prescribed under regulations and need based a) Compliance with rules and regulations b) Corporate governance framework c) Long-term business performance d) Financial performance e) Prudent business practices f) Workforce engagement Customers Yes E-mail, SMS, calls, digital avenues like chat-bot, WhatsApp, self-help website and PLANET App Monthly Quarterly Annually Need based a) Best-in-class service for customers b) Effective customer grievance redressal mechanism c) Net Promoter Score (NPS) for customer satisfaction d) Maintaining customer data privacy and security e) Suitability of products and service f) Transparent and fair advice Integrated Annual Report 2024-25342
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Stakeholder Group Whether identified as vulnerable & marginalized group (Yes/No) Channels of communication (Email, SMS, newspaper, pamphlets, advertisement, community meetings, notice board, website), Other Frequency of engagement (Annually/ half yearly/ quarterly / others – please specify) Purpose and scope of engagement including key topics and concerns raised during such engagement Vendors and CSR implementing partners No Website, meetings, surveys, annual value chain connect and workshop, annual events like R.AI.SE. Quarterly Annually As needed a) Fair contractual terms and adherence thereto b) ESG Assessment c) Transparent, ethical and long- term business relations d) Regular exchange of technical know-how Community Yes Community meetings, house-hold visits Annually, at periodic intervals as part of implementing CSR initiatives a) Stakeholder programmes to advocate sustainable customer behaviour b) Digital financial inclusion c) Advocacy of best practices d) Public policy advocacy e) Disaster management f) Road safety g) Integrated water resource management h) Sustainable Livelihood through tree plantation Key concerns or topics raised by various stakeholders are considered, and if found relevant, necessary actions are taken including amendments to the policies. 1. Provide the processes for consultation between stakeholders and the Board on economic, environmental, and social topics or if consultation is delegated, how is feedback from such consultations provided to the Board. a) The management team of the Company regularly interacts with various stakeholders at periodic intervals through varied means to gather insights as well as seek their feedback and inputs on pertinent issues. The insights / feedback / inputs so received are discussed and if found feasible, presented to the Board as well as its Committees through various means like incorporating them in the policy framework, carrying out process improvements, etc. b) In addition to the aforesaid, Board members also interact with customers directly during the branch / field visits conducted by them. The Chairperson of the Audit Committee independently interacts with the auditors rating agencies, and regulators and provides the feedback to the Board. Thus, there exists a strong process on consultation with the stakeholders and keeping the Board aware of the insights / feedback / inputs. c) Various Board members also visit CSR project sites as part of familiarisation visits and interact with beneficiaries. Leadership Indicators Corporate Overview Statutory Reports Financial Statements L&T Finance 343
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2. Whether stakeholder consultation is used to support the identification and management of environmental, and social topics (Yes / No). If so, provide details of instances as to how the inputs received from stakeholders on these topics were incorporated into policies and activities of the entity. Yes. On a number of important projects, like Double Materiality Assessment, Business Impact Study, ISO 45001:2018 certification, etc., LTF engaged with third-party consultants who interacted with different stakeholders to provide responsible solutions. The consultants have been engaged to offer advice on various ESG-related matters, particularly ESG roadmap. Second party studies by independent consultants on plantation, social impact, water conservation projects and employee engagement survey were also undertaken. For more details, please refer to the Stakeholder Engagement section of the Report 3. Provide details of instances of engagement with, and actions taken to, address the concerns of vulnerable/ marginalized stakeholder groups. LTF has been successful in meeting the requirements of the marginalised and vulnerable population through its Rural Business Finance and Farmer Finance businesses. LTF has effectively reached out to communities through its Sustainability Focused Loans and Priority Sector Lending. Through the Company’s CSR programmes, LTF remained resolute in Its pursuit of the Sustainable Development Goals and the empowerment of marginalised populations. 1. Employees and workers who have been provided training on human rights issues and policy(ies) of the entity, in the following format: Category FY 2024-25 FY 2023-24 Total (A) No. of employees / workers covered (B) % (B/A) Total (C) No. of employees / workers covered (D) % (D/C) Employees Permanent 36,521 35,255 97 30,534 29,356 96 Other than permanent 0 0 0 0 0 0 Total employees 36,521 35,255 97 30,534 29,356 96 Workers - N.A. Businesses should respect and promote human rights Essential Indicators PRINCIPLE 5 Integrated Annual Report 2024-25344
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2. Details of minimum wages paid to employees and workers, in the following format Category FY 2024-25 FY 2023-24 Total (A)* Equal to minimum wage More than minimum wage Total (D) Equal to minimum wage More than minimum wage No. (B) % (B/A) No. (C) % (C/A) No. (E) % (E/D) No. (F) % (F/D) Employees Permanent Male 34,562 580 2 33,982 98 29,143 681 2 28,462 98 Female 1,959 94 5 1,865 95 1,391 92 7 1,299 93 Other 0 0 0 0 0 0 0 0 0 0 Total employees 36,521 674 3.5 35,847 96.5 30,534 773 4.5 29,761 97 Workers - N.A. 3. Details of remuneration/salary/wages, in the following format: a. Median remuneration / wages: Category Male Female Other Number Median remuneration/ salary/ wages of respective category Number Median remuneration/ salary/ wages of respective category Number Median remuneration/ salary/ wages of respective category Board of Directors (BoD) 5 27,65,000* 2 29,12,500 0 0 Key Managerial Personnel** 2 4,24,53,571 1 N.A. 0 0 Employees other than BoD and KMP** 34,560 3,19,437 1,958 2,64,302 0 0 *For Non-Executive Directors (except Mr. S.N. Subrahmanyan and Mr. R. Shankar Raman who do not draw remuneration from the Company), fees and commission paid in respect of the Company as per the criteria and structure approved is considered ** Gross wages are considered as basic pay for the employees b. Gross wages paid to females as % of total wages paid by the entity, in the following format: FY 2024-25 Current financial year FY 2023-24 Previous financial year Gross wages paid to females as % of total wages* 6.71 6.73 *Gross wages are considered as basic pay for the employees 4. Do you have a focal point (Individual/ Committee) responsible for addressing human rights impacts or issues caused or contributed to by the business? (Yes/No) Adherence of Human Rights is critical and a basic requirement at LTF. The Code of Conduct for employees covers all ethical and responsible business conduct. Any violation to the Code of Conduct can be reported to the Code of Conduct Committee. The violations can be reported by writing a mail to code@ltfs.com. Corporate Overview Statutory Reports Financial Statements L&T Finance 345
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5. Describe the internal mechanisms in place to redress grievances related to human rights issues. LTF derives its principles and values from its parent company, L&T. This includes respecting honest, ethical, and professional standards of behaviour as well as respect for human values and individual dignity. The Company has put in place a Code of Conduct to ensure that employees are actively guided by these principles and follow them. The Code of Conduct outlines expectations from employees in terms of professionalism, information exchange, and vendor interactions. The training for the Code of Conduct is part of the onboarding process for new employees. Every year, existing non-frontline staff are required to complete the Code of Conduct learning programme and pass the post-training exam. It is a standard practice to conduct awareness campaigns to educate employees on appropriate behaviour in the workplace and ways to express concerns. Any incident that results in violation of this code can be reported by employees through code@ltfs.com to convey their concerns/issues. FY 2024-25 Current financial year FY 2023-24 Previous financial year Filed during the year Pending resolution at the end of year Remarks Filed during the year Pending resolution at the end of year Remarks Sexual Harassment* 10 1 - 1 0 - Discrimination at workplace 0 0 - 0 0 - Child Labour 0 0 - 0 0 - Forced Labour/ Involuntary Labour 0 0 - 0 0 - Wages 0 0 - 0 0 - Other human rights related issues 0 0 - 0 0 - *There are no cases pending as on the date of the Report. 6. Number of Complaints on the following made by employees and workers: FY 2024-25 Current financial year FY 2023-24 Previous financial year Total Complaints reported under Sexual Harassment on of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH) 10 1 Complaints on POSH as a % of female employees / workers 0.51 0.07 Complaints on POSH upheld 6 1 7. Complaints filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, in the following format: Integrated Annual Report 2024-25346
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8. Mechanisms to prevent adverse consequences to the complainant in discrimination and harassment cases. a) Wecare@ltfs.com is the dedicated email address that LTF has set up for employees to report incidents of sexual harassment. To protect the complainant’s privacy and maintain confidentiality, the Internal Committee only has access to this email box. An external member serves on the Internal Committee to ensure fair assessment. b) In compliance with regulatory requirements, a Vigil Mechanism Framework is in place, not only ensuring a structured process for reporting issues without fear of retaliation but also protecting employees from unfair prejudicial employment practices. 9. Do human rights requirements form part of your business agreements and contracts? (Yes/No) Yes 11. Provide details of any corrective actions taken or underway to address significant risks / concerns arising from the assessments at Question 9 above. N.A. There have been no concerns arising from human rights requirements forming part of our Third-Party Code of Conduct. We have engaged with our value chain on ESG assessment including Human rights. 10. Assessments of the year % of your plants and offices that were assessed (by entity or statutory authorities or third parties) Child labour 100 Forced/involuntary labour 100 Sexual harassment 100 Discrimination at workplace 100 Wages 100 Others – please specify - Leadership Indicators 1. Details of a business process being modified / introduced as a result of addressing human rights grievances/ complaints. No significant complaints were substantiated which required modification / introduction of buisness process. Corporate Overview Statutory Reports Financial Statements L&T Finance 347
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2. Details of the scope and coverage of any Human rights due-diligence conducted Human Rights assessment was carried out as part of the value chain assessment framework covering >75% of value chain partners of LTF (upstream and downstream) (cumulatively, comprising both purchases / sales by value). 3. Is the premise/office of the entity accessible to differently abled visitors, as per the requirements of the Rights of Persons with Disabilities Act, 2016? Yes, of the major offices of the Company, head office at Mumbai and the branch located in Kolkata are PWD friendly. Major business of the Company is undertaken at field level or at offices of the dealers or through online mode. 4. Details on assessment of value chain partners: % of value chain partners (by value of business done with such partners) that were assessed Sexual harassment >75 Discrimination at workplace Child labour Forced/involuntary labour Wages Others – please specify 5. Provide details of any corrective actions taken or underway to address significant risks / concerns arising from the assessments at Question 4 above. As per the value chain assessment conducted in FY25, no corrective actions were taken. Additionally, the same principles, business ethics, and ESG standards that the Company promotes must be upheld by all of LTF’s value chain partners. A vital component of loan agreements and other value chain agreements is adherence to the Third-Party Code of Conduct. Integrated Annual Report 2024-25348 1. Details of total energy consumption (in Joules or multiples) and energy intensity, in the following format: Parameter FY 2024-25 (Current financial year) FY 2023-24 (Previous financial year) From Renewable Sources Total electricity consumption (A) 18,242.38 GJ 9,328.07 GJ Total fuel consumption (B) 0 0 Energy consumption through other sources (C) 0 0 Total energy consumption (A+B+C) 18,242.38 GJ 9,328.07 GJ Businesses should respect and make efforts to protect and restore the environment Essential Indicators PRINCIPLE 6
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Corporate Overview Statutory Reports Financial Statements L&T Finance 349 2. Does the entity have any sites / facilities identified as designated consumers (DCs) under the Performance, Achieve and Trade (PAT) Scheme of the Government of India? (Y/N) If yes, disclose whether targets set under the PAT scheme have been achieved. In case targets have not been achieved, provide the remedial action taken, if any. No Parameter FY 2024-25 (Current financial year) FY 2023-24 (Previous financial year) From Non-Renewable Sources Total electricity consumption (D) 9,506.46 GJ 14,784.08 GJ Total fuel consumption (E) 1,053.32 GJ 870.38 GJ Energy consumption through other sources (F) 0 0 Total energy consumed from non-renewable sources (D+E+F) 10,559.78 GJ 15,654.46 GJ Total energy consumed (A+B+C+D+E+F) 28,802.16 GJ 24,982.53 GJ Energy intensity per rupee of turnover (Total energy consumed/ Revenue from operations) 0.000000181 0.000000178 Energy intensity per rupee of turnover adjusted for Purchasing Power Parity (PPP) (Total energy consumed / Revenue from operations adjusted for PPP) 0.000003733 0.000003982 Energy intensity in terms of physical output - - Energy intensity (optional) – the relevant metric may be selected by the entity 0.79 GJ/FTE 0.82 GJ/FTE Note: Indicate if any independent assessment/ evaluation/assurance has been carried out by an external agency? (Y/N) If yes, name of the external agency. Yes, Assurance by BDO India Limited Liability Partnership 3. Provide details of the following disclosures related to water, in the following format: Parameter FY 2024-25 (Current financial year) FY 2023-24 (Previous financial year) Water withdrawal by source (in kilolitres) (i) Surface water 0 0 (ii) Groundwater 0 0 (iii) Third party water (Municipal water supplies) 4,55,914.44 3,41,077 (iv) Seawater / desalinated water 0 0 (v) Others 0 0 Total volume of water withdrawal (in kilolitres) (i + ii + iii + iv + v) 4,55,914.44 3,41,077 Total volume of water consumption (in kilolitres) 4,55,914.44 3,41,077
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Integrated Annual Report 2024-25350 Parameter FY 2024-25 (Current financial year) FY 2023-24 (Previous financial year) Water intensity per rupee of turnover (Total Water consumption / Revenue from operations) 0.00000286 0.00000242 Water intensity per rupee of turnover adjusted for Purchasing Power Parity (PPP) (Total water consumption / Revenue from operations adjusted for PPP) 0.00005909 0.00005435 Water intensity in terms of physical output - - Water intensity (optional) – the relevant metric may be selected by the entity 12.48 11.17 Note: Indicate if any independent assessment/ evaluation/assurance has been carried out by an external agency? (Y/N) If yes, name of the external agency. Yes, Assurance by BDO India Limited Liability Partnership 4. Provide the following details related to water discharged: N.A. LTF’s usage of water is essentially for domestic purposes like drinking and sanitation for employees and being a service sector company, no effluent discharge is involved in it’s business activity. 5. Has the entity implemented a mechanism for Zero Liquid Discharge? If yes, provide details of its coverage and implementation. LTF revamped the STP installed at corporate office to reduce freshwater consumption and enhance recycling capacity of its wastewater. LTF uses the treated water for gardening purposes, and rest is directed to municipal sewers. Also, LTF has also carried out an internal assessment study of Zero-Liquid Discharge and has built a roadmap for pan India. 6. Please provide details of air emissions (other than GHG emissions) by the entity, in the following format: Parameter Please specify unit FY 2024-25 (Current financial year) FY 2023-24 (Previous financial year) NOx PPM 51.6 42.8 SOx Mg/Nm3 41.2 35.1 Particulate matter (PM) Mg/Nm3 64.4 58.2 Persistent organic pollutants (POP) - - - Volatile organic compounds (VOC) - - - Hazardous air pollutants (HAP) - - - Others – Please specify - - - Note: Indicate if any independent assessment/ evaluation/assurance has been carried out by an external agency? (Y/N) If yes, name of the external agency. Yes, Assurance by BDO India Limited Liability Partnership
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Corporate Overview Statutory Reports Financial Statements L&T Finance 351 7. Provide details of greenhouse gas emissions (Scope 1 and Scope 2 emissions) & its intensity, in the following format: Parameter Unit FY 2024-25 (Current financial year) FY 2023-24 (Previous financial year) Total Scope 1 emissions (Break-up of the GHG into CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, if available) Metric tonnes of CO2 equivalent 386.23 405.47 Total Scope 2 emissions* (Break-up of the GHG into CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, if available) Metric tonnes of CO2 equivalent 1,909.16 2,312.25 Total Scope 1 and Scope 2 emission intensity per rupee of turnover (Total Scope 1 and Scope 2 GHG emissions / Revenue from operations) Metric tonnes of CO2 equivalent / Rs 0.000000014 0.000000019 Total Scope 1 and Scope 2 emission intensity per rupee of turnover adjusted for Purchasing Power Parity (PPP) (Total Scope 1 and Scope 2 GHG emissions / Revenue from operations adjusted for PPP) Metric tonnes of CO2 equivalent / Rs Revenue from operations adjusted for PPP 0.0000002975 0.000000433 Total Scope 1 and Scope 2 emission intensity in terms of physical output - - - Total Scope 1 and Scope 2 emission intensity (optional) – the relevant metric may be selected by the entity tCO2e/FTE 0.06 0.09 *Scope 2 has been reported based on market-based approach in which green power consumption and green energy attributes i.e. iREC are considered. Note: Indicate if any independent assessment/ evaluation/assurance has been carried out by an external agency? (Y/N) If yes, name of the external agency. Yes, Assurance by BDO India Limited Liability Partnership 8. Does the entity have any project related to reducing Greenhouse Gas emission? If Yes, then provide details. Yes, the Company’s decarbonisation plan is focused on energy-saving measures and switching to green power and green attributes wherever available and feasible. The Company consumes 33% of green power and green attributes in its operations. To help cut down on energy use, the Company has implemented a number of technical solutions. Implementation of Internet of Things (IOT) based energy management solutions, supporting RE projects through procuring green attributes, installing and using energy-efficient equipment, such as sensor-based lighting in offices, variable frequency drives (VFDs) for air handling units, LED lighting and energy-efficient 5-star air conditioners in offices, low GWP refrigerants like R32, an ATC system for chiller maintenance, replacing DG sets with inverters to lower carbon emissions and EV charging stations in corporate offices are a few of the initiatives undertaken by LTF. ~79% of all Maharashtra branches operate on green power. The Company has taken up the initiatives of tree plantation through its “Project Prakruti” to sequester carbon. The Company will continue to search for and evaluate novel methods of conserving carbon and reducing its carbon footprint in order to reach its carbon neutrality target. The Company has diligently implemented ISO 14064-2:2019 standards to ensure that its plantation project’s carbon sequestration measurements, monitoring processes, and subsequent reports adhere to international best practices. Through rigorous adherence to ISO 14064-2:2019 guidelines, LTF has established robust protocols for accurately quantifying and verifying carbon sequestration levels.
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Integrated Annual Report 2024-25352 9. Provide details related to waste management by the entity, in the following format: Parameter FY 2024-25 (Current financial year) FY 2023-24 (Previous financial year) Total Waste generated (in metric tonnes) Plastic waste (A) 0 0 E-waste (B) 4.40 3.32 Bio-medical waste (C) 0 0 Construction and demolition waste (D) 18.48 0 Battery waste (E) 0.73 0 Radioactive waste (F) 0 0 Other Hazardous waste. Please specify, if any. (G) 0 0 Other Non-hazardous waste generated (H). Please specify, if any. (Break-up by composition i.e. by materials relevant to the sector) 242.47 59.66 Total (A+B + C + D + E + F + G + H) 266.08 62.98 Waste intensity per rupee of turnover (Total waste generated / Revenue from operations) 0.0000000017 0.0000000004 Waste intensity per rupee of turnover adjusted for Purchasing Power Parity (PPP) (Total waste generated / Revenue from operations adjusted for PPP) 0.0000000345 0.000000010 Waste intensity in terms of physical output - - Waste intensity (optional) – the relevant metric may be selected by the entity 0.007 0.00206 For each category of waste generated, total waste recovered through recycling, re-using or other recovery operations (in metric tonnes) Category of waste (i) Recycled 50.86 16.96 (ii) Re-used 0 0 (iii) Other recovery operations 0 0 Total 50.86 16.96 Intensity (Kg of Waste Recycled Recovered / Total Waste Generated) 0.19 0.27 For each category of waste generated, total waste disposed by nature of disposal method (in metric tonnes) Category of waste (i) Incineration 0 0 (ii) Landfilling 215.22 46.02 (iii) Other disposal operations 0 0 Total 215.22 46.02 Intensity (Kg / MT of Waste disposed / Total Waste generated) 0.81 0.73 Note: Indicate if any independent assessment/ evaluation/assurance has been carried out by an external agency? (Y/N) If yes, name of the external agency. Yes, Assurance by BDO India Limited Liability Partnership
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Corporate Overview Statutory Reports Financial Statements L&T Finance 353 10. Briefly describe the waste management practices adopted in your establishments. Describe the strategy adopted by your company to reduce usage of hazardous and toxic chemicals in your products and processes and the practices adopted to manage such wastes. As an NBFC providing services, no poisonous or hazardous chemicals are produced throughout the production process. Paper waste and e-waste are the two main types of waste produced by the Company operations. In particular, the Company manages all of its IT assets in accordance with the E-waste management and handling recommendations of 2011, 2016, and 2018. The Company’s centralised e-waste management strategy, which is applicable to all LTF offices and branches, helps it collect and dispose of e-waste safely. The Company collects electronic waste and disposes of it with a registered recycler through regular corporate and zonal-level activities. This ensures that no electrical waste from the Company ends up in a landfill and is always recycled. The Company in FY25 segregated and recycled wet and dry waste generated at its corporate office and other branch in Mumbai, through an external authorised vendor. This has reduced the amount of waste to landfill. Regarding waste paper, the Company has made several attempts to cut back on paper usage. Its drive to digitalise its operations has resulted in a notable decrease in paper consumption. The Company has reduced its desktop stationary as a result of its ongoing initiatives. 11. If the entity has operations/offices in/around ecologically sensitive areas (such as national parks, wildlife sanctuaries, biosphere reserves, wetlands, biodiversity hotspots, forests, coastal regulation zones etc.) where environmental approvals / clearances are required, please specify details in the following format: N.A. None of our owned offices fall under ecologically sensitive areas. 12. Details of environmental impact assessments of projects undertaken by the entity based on applicable laws, in the current financial year: LTF operates out of leased premises except its Head Office and the nature of business does not warrant Environmental Impact assessment. 13. Is the entity compliant with the applicable environmental law/ regulations/ guidelines in India; such as the Water (Prevention and Control of Pollution) Act, Air (Prevention and Control of Pollution) Act, Environment protection act and rules thereunder (Y/N). If not, provide details of all such non-compliances, in the following format: N.A. The Company is in compliance with all applicable laws as per mandatory requirements.
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Integrated Annual Report 2024-25354 Leadership Indicators 1. Water withdrawal, consumption and discharge in areas of water stress (in kilolitres): For each facility / plant located in areas of water stress, provide the following information: (i) Name of the area: (ii) Nature of operations (iii) Water withdrawal, consumption and discharge in the following format: N.A. All the branches of the Company are located in residential/commercial areas. Note: Indicate if any independent assessment/ evaluation/assurance has been carried out by an external agency? (Y/N) If yes, name of the external agency. 2. Please provide details of total Scope 3 emissions & its intensity, in the following format: Parameter Unit FY 2024-25 (Current financial year) FY 2023-24 (Previous financial year) Total Scope 3 emissions (Break-up of the GHG into CO2, CH4, N2O, HFCs, PFCs, SF6, NF3, if available) tCO2e 49,140.00* 6,698.35 Total Scope 3 emissions per rupee of turnover tCO2e/₹ 0.00000031 0.0000000477 Total Scope 3 emission intensity (optional) – the relevant metric may be selected by the entity tCO2e/FTE 1.35 0.22 * Increase in Scope 3 emissions is due to increased capturing and reporting of additional scope 3 categories (Category 1,3,5,7) Note: Indicate if any independent assessment/ evaluation/assurance has been carried out by an external agency? (Y/N) If yes, name of the external agency. Yes, Assurance by BDO India Limited Liability Partnership 3. With respect to the ecologically sensitive areas reported at Question 11 of Essential Indicators above, provide details of significant direct & indirect impact of the entity on biodiversity in such areas along-with prevention and remediation activities. N.A. 4. If the entity has undertaken any specific initiatives or used innovative technology or solutions to improve resource efficiency, or reduce impact due to emissions / effluent discharge / waste generated, please provide details of the same as well as outcome of such initiatives, as per the following format: S. No Initiative undertaken Details of the initiative (Web- link, if any, may be provided along-with summary) Outcome of the initiative 1 Energy Audits and Assessment Top 50 branches (Top 10 energy audits and rest 40 branches energy assessment) Initiative has helped in identifying energy and cost saving opportunities and pave the way for implementing energy-saving measures effectively. 2 Green Power Implemented at head office and 25 others branches across Maharashtra, Telangana and Tamil Nadu Reduction in use of carbon intensity, conventional power and reducing carbon footprint
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Corporate Overview Statutory Reports Financial Statements L&T Finance 355 S. No Initiative undertaken Details of the initiative (Web- link, if any, may be provided along-with summary) Outcome of the initiative 3 Replacement of conventional lighting with LEDs Implemented across all offices Reduction in energy consumption 4 Energy efficient ACs Implemented at head office and all new branches. Phasing out of old low energy rated ACs Reduction in energy consumption 5 Automatic Tube Cleaning System Installed at head office Avoid continuous running of pump resulting in power saving, Eliminated accumulation, residue, and foulant instead of using toxic materials 6 Recycled Paper Reams Pan India - LTF uses recycled papers for printing documents Using recycled paper reduces the need to cut down trees, protecting natural resources. Recycling paper decreases air pollution from combustion and frees up landfill space. 7 Energy saving solutions based on Internet of Things (IOT) Installed across 7 Branches Using IOT based solutions, energy consumption is optimised thus resulting into energy saving 8 Revamped STP Installed at head office Reduction in freshwater consumption and enhanced recycling capacity if wastewater 9 Strengthen Waste Segregation and Recycling Carried out a head office Strengthened segregation and recycling through tie-ups with waste segregators and recyclers in addition to the existing of e-waste recycling process 5. Does the entity have a business continuity and disaster management plan? Give details in 100 words/ web link. Yes. LTF has established a comprehensive Business Continuity Plan (BCP) and Disaster Recovery (DR) strategy to ensure the continuous availability of business applications and services. To proactively manage risks and prevent disruptions, regular risk and gap assessments and audits are conducted across Data centres, IT infrastructure, Business application, and third-party integrations. Additionally, a Business Impact Analysis (BIA) is performed to evaluate critical applications, systems and their dependencies. LTF digital platform is designed with a multi-layered, 3-tier security architecture featuring built-in disaster recovery capabilities and robust defence mechanisms against cyber threats. These measures collectively reinforce business continuity and minimize downtime and services disruptions, ensuring operational stability. LTF is an ISO27001 certified company. 6. Disclose any significant adverse impact to the environment, arising from the value chain of the entity. What mitigation or adaptation measures have been taken by the entity in this regard. No significant adverse impacts have been identified from the value chain of the entity. 7. Percentage of value chain partners (by value of business done with such partners) that were assessed for environmental impacts. >75%. LTF has finalised a Value Chain ESG Assessment framework and rolled out the assessment covering >75% of value chain partners of LTF (upstream and downstream) (cumulatively, comprising both purchases / sales by value).
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Integrated Annual Report 2024-25356 1. a. Number of affiliations with trade and industry chambers/ associations. 5 b. List the top 10 trade and industry chambers/ associations (determined based on the total members of such a body) the entity is a member of/ affiliated to. Sr. No. Name of the trade and industry chambers/ associations Reach of trade and industry chambers/ associations (State/National) 1 NBFC Committee, FICCI National 2 Confederation of Indian Industry National 3 Microfinance Institutions Network National 4 Finance Industry Development Council National 5 CII WR Sub- Committee on Business Responsibility State Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent PRINCIPLE 7 Essential Indicators 2. Provide details of corrective action taken or underway on any issues related to anti-competitive conduct by the entity, based on adverse orders from regulatory authorities. N.A.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 357 1. Details of public policy positions advocated by the entity: Sr. No. Public policy advocated Method resorted for such advocacy Whether information available in the public domain? (Yes/No) Frequency of Review by Board (Annually/ Half yearly/ Quarterly / Others – please specify) Web Link, if available 1 The Company has actively engaged in public policy advocacy, making several representations to various authorities regarding the practical challenges faced in implementing regulatory requirements. Additionally, we have made proactive suggestions to improve these frameworks. We promote robust corporate governance standards, emphasizing transparency and accountability. We have made representations to regulatory bodies about the challenges in meeting extensive reporting requirements and have suggested streamlined reporting frameworks that reduce administrative burdens while maintaining transparency. Through direct engagement with regulatory bodies, participation in industry associations, and collaboration with other stakeholders, we strive to drive policy changes that uphold high standards while considering the practicalities of implementation for businesses. This not only addresses the practical challenges but also highlights the proactive steps the Company has taken to suggest improvements, demonstrating a forward- thinking and collaborative approach to public policy advocacy. As a proactive measure, the Company provides various suggestions / proposals along with the necessary rationale to the regulators on various consultation papers issued from time to time prior to them becoming effective in the form of a statute. An update on the representations made to the regulatory authorities is placed before the Board along with other regulatory changes that currently impact / would impact the Company along with necessary synopsis. No As and when needed - Leadership Indicators
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Integrated Annual Report 2024-25358 1. Details of Social Impact Assessments (SIA) of pr ojects undertaken by the entity based on applicable laws, in the current financial year. Name and brief details of project SIA Notification No. Date of notification Whether conducted by independent external agency (Yes / No) Results Communicated in public domain (Yes / No) Relevant Web link Digital Sakhi Project, East Medinipur. - Interventions of Digital Financial Literacy and Entrepreneurship Development by 450 Digital Sakhi(s) and 1,000 women entrepreneurs in the digital space SIA/01/2024-25 29-Apr-24 Yes Yes https://www. ltfinance.com/ Digital Sakhi Project, Odisha - Interventions of Digital Financial Literacy and Entrepreneurship Development by 100 Digital Sakhi(s) and 1,000 women entrepreneurs in the digital space SIA/01/2024-25 29-Apr-24 Yes Yes https://www. ltfinance.com/ 2. Pr ovide information on project(s) for which ongoing Rehabilitation and Resettlement (R&R) is being undertaken by your entity, in the following format: N.A. L TF is a Non-banking Financial Company (NBFC) and provides financial services. It operates out of leased premises except its head office and the nature of business does not warrant Rehabilitation and Resettlement (R&R). 3. Describe the mechanisms to r eceive and redress grievances of the community. L TF has taken steps to ensure that its CSR projects are conducted in a responsible and transparent manner, and that community members and stakeholders have the opportunity to participate in the process. Developing a grievance redressal system illustrates the Company’s commitment to accountability and transparency when it comes to dealing with any concerns or complaints regarding CSR projects / programs. In FY25, L TF strengthened the mechanisms for transparency by introducing a Dedicated Grievance Redressal Officers (GROs), who continuously work to ensure that complaints are handled independently, and without bias. Also, ther e are Community Advisory Panels (CAPs), that are now active in all projects that have been running for over two years, and are held in quarterly meetings to gather and address feedback. In addition to this, continuous monitoring and evaluation is undertaken by conducting monthly online reviews, facilitated by dynamic discussions with NGO partners, enabling proactive decision making and monitoring of project progress. Also, on-site field visits are conducted which provides firsthand insights into the project implementation, helping addressing and identifying potential challenges swiftly. It further demonstrates the Company’ s commitment to improving its CSR practices and maintaining positive relationships with stakeholders. Concerns or questions regarding the CSR programme(s) are required to be addressed to csr@ltfs.com. Businesses should promote inclusive growth and equitable development PRINCIPLE 8 Essential Indicators
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Corporate Overview Statutory Reports Financial Statements L&T Finance 359 4. Per centage of input material (inputs to total inputs by value) sourced from suppliers: FY 2024-25 Current financial year FY 2023-24 Previous financial year Directly sourced from MSMEs/ small producers 18.22 15.56 Sourced directly from within the district and neighboring districts 99.57 99.90 5. Job cr eation in smaller towns – Disclose wages paid to persons employed (including employees or workers employed on a permanent or non-permanent / on contract basis) in the following locations, as % of total wage cost Location FY 2024-25 Current financial year (%) FY 2023-24 Previous financial year (%) Rural 57.63 53.01 Semi-urban 5.36 4.85 Urban 8.30 8.82 Metropolitan 28.71 33.32 Bifurcation as per Database On Indian Economy, RBI’s Data Warehouse https://dbieold.rbi.org.in/ 2. Pr ovide the following information on CSR projects undertaken by your entity in designated aspirational districts as identified by government bodies: Sr. No. State Aspirational District Amount spent (In `) 1 - - - 1. Pr ovide details of actions taken to mitigate any negative social impacts identified in the Social Impact Assessments (Reference: Question 1 of Essential Indicators above): Details of negative social impact identified Corrective action taken No significant impact N.A. LTF is a Non-banking Financial Company (NBFC) and provides financial services. Social Impact Assessments are carried out for our CSR projects which have positive social and environmental impacts. Leadership Indicators 3. (a) Do you have a pr eferential procurement policy where you give preference to purchase from suppliers comprising marginalized /vulnerable groups? (Yes/No) No. But we have adopted a Sustainable Pr ocurement policy. (b) Fr om which marginalized /vulnerable groups do you procure? N.A. (c) What per centage of total procurement (by value) does it constitute? N.A. 4. Details of the benefits derived and shar ed from the intellectual properties owned or acquired by your entity (in the current financial year), based on traditional knowledge: N.A. No intellectual pr operties acquired on traditional knowledge
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Integrated Annual Report 2024-25360 5. Details of corrective actions taken or underway, based on any adverse order in intellectual property related disputes wherein usage of traditional knowledge is involved. N.A. 6. Details of beneficiaries of CSR Projects: Sr. No. CSR Project No. of persons benefited from CSR Projects % of beneficiaries from vulnerable and marginalized groups 1 Digital Sakhi North Karnataka 2,52,460 80 2 Digital Sakhi South Karnataka 1,87,518 80 3 Digital Sakhi Kerala 1,42,681 76 4 Digital Sakhi Tamil Nadu (Madurai) 1,34,049 97 5 Digital Sakhi Uttar Pradesh (Gorakhpur) 1,27,800 76 6 Digital Sakhi Bihar (Supaul) 1,24,100 80 7 Digital Sakhi WB (Murshidabad) 1,21,144 38 8 Digital Sakhi Uttar Pradesh (Kushinagar) 1,13,234 76 9 Digital Sakhi Bihar (Saharsha) 1,07,536 80 10 Digital Sakhi Rajasthan 1,13,477 79 11 Project Prakruti 204 80 12 Road Safety Awareness 119,978 46 13 Disaster Relief 133,000 76 14 Health camps 2,196 100 15 Jalvaibhav 14,222 80 Total 16,93,599 - Businesses should engage with and provide value to their consumers in a responsible manner PRINCIPLE 9 Essential Indicators 1. Describe the mechanisms in place to receive and respond to consumer complaints and feedback. Customer complaints are addressed through a variety of multi-layered grievance redressal processes that are hosted on platforms like emails, phones, websites, and the Planet App. A CRM system is used to record and handle each and every complaint that comes in through various channels. A Grievance Redressal Officer (GRO) is employed by the Company. In accordance with RBI regulations, an internal ombudsman has also been appointed to handle client concerns. For more details, please refer to the Social and Relationship Capital on customer grievances mechanism of the Report 2. Turnover of products and/ services as a percentage of turnover from all products/service that carry information about: N.A. LTF is a Non-banking Financial Company (NBFC) and provides financial services. We do not manufacture any product or have a service that can carry information about the question.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 361 3. Number of consumer complaints in respect of the following: FY 2024-25 (Current financial year) Remarks FY 2023-24 (Previous financial year) Remarks Received during the year Pending resolution at end of year Received during the year Pending resolution at end of year Data privacy 0 0 - 0 0 - Advertising 0 0 - 0 0 - Cyber-security (Digital Complaints) 0 0 - 0 0 - Delivery of essential services 16,794 773* - 27,494 767 - Restrictive Trade Practices 0 0 - 0 0 - Unfair Trade Practices 0 0 - 0 0 - Other 0 0 - 0 0 - *As on date of the issue of the Report, the pending case has been closed 4. Details of instances of product recalls on account of safety issues: N.A. LTF is a Non-banking Financial Company (NBFC) and provides financial services. We do not manufacture any product which needs to be recalled voluntarily. 5. Does the entity have a framework/ policy on cyber security and risks related to data privacy? (Yes/No) If available, provide a web-link of the policy. Yes. Please refer the section Policy Compendium for accessing the policy. 6. Provide details of any corrective actions taken or underway on issues relating to advertising, and delivery of essential services; cyber security and data privacy of customers; re-occurrence of instances of product recalls; penalty / action taken by regulatory authorities on safety of products / services. The Company has taken the following initiatives to improve customer experience and satisfaction in order to solve the main issues: • Automatically categorising issue categories under “High priority” that are designated as “complaints,” and placing the rest interactions under “High” and “Medium” categories based on the case origin • The customer grievance acknowledgement procedure has been redesigned, and the complaint closure SMS has been benchmarked and updated. • Awareness to customers on cyber frauds • Governance controls are in place to correct gaps and prevent future problems, and a framework for reviewing the primary complaints’ root causes has been implemented. • Creation of a specialised Central Resolution Team to handle customer complaints only • Implementation of a thorough Quality Control mechanism to increase resolution efficiency • Auditing and training external partners and internal stakeholders • Implementation of system-based controls in the CRM that prevent the closure of any unresolved complaints • Complete redesign of workflows for the top complaints • Net Promoter Score (NPS) to capture customer satisfaction
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Integrated Annual Report 2024-25362 • L TF has appointed an Internal Ombudsman (IO), an independent person. Complaints received from the customers which were wholly or partly rejected by the organisation are referred to the IO for review as per RBI guidelines. The IO upheld these cases which had factual evidence validating company decision 7. Pr ovide the following information relating to data breaches: No data breaches as on H1 FY25 a. Number of instances of data br eaches- 0 b. Per centage of data breaches involving personally identifiable information of Customers- 0 c. Impact, i f any, of the data breaches- N.A. 1. Channels / platforms wher e information on products and services of the entity can be accessed (provide web link, if available). Information about LTF’s products and services are available on its website. (https://www.ltfinance.com/) 2. Steps taken to inform and educate consumers about safe and responsible usage of products and/or services. L TF has implemented robust systems to ensure that customers always have access to all available information on its products and services. Additionally, your Company has developed the customer awareness training module, which is available on its website (https://www.ltfinance.com/) and covers topics like, customer advisory, interest rate model, gradation of risk, schedule of charges, Prime Lending Rates (PLR), the ombudsman scheme, the self-help option, the list of terminated service providers, and the process. Customer education blogs are also available on the website. 3. Mechanisms in place to inform consumers of any risk of disruption/discontinuation of essential services. Y es. Through SMS, What’s App and PLANET App 4. Does the entity display pr oduct information on the product over and above what is mandated as per local laws? (Yes/No/Not Applicable) If yes, provide details in brief. Did your entity carry out any survey with regard to consumer satisfaction relating to the major products / services of the entity, significant locations of operation of the entity or the entity as a whole? (Yes/No) Yes. To empower and assist clients to make wise financial decisions, the Company proactively launches educational activities. The Company has mechanisms in place to guarantee that all clients are always given enough information about all products. For the benefit of its clients, the Company created a customer awareness training module and made it publicly accessible on its website (www.ltfinance.com). LTF ran a variety of social media efforts for customer awareness and sensitisation during the year. These contain, among other things, articles on financial literacy, driving safety, health, and environmental preservation. Blogs on various customer education topics are also made available on the website. L TF undertook its maiden Net Promoter Score (NPS) initiative in FY24, to gauge customer loyalty and satisfaction across all its products during the customer onboarding journey. Incrementally, LTF has successfully deployed and measured Net Promoter Score (NPS) for customer interactions with various touch points in FY25. Leadership Indicators
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Corporate Overview Statutory Reports Financial Statements L&T Finance 363
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We conducted a review and verification of data collection, collation, and calculation methodologies, and a general review of the logic of inclusion/omission of relevant information/data in the Report. Our review process included: Evaluate and assess the appropriateness of the quantification methods used to arrive at the non-financial/sustainability information of the BRSR Core Indicators select non-core indicators and selected IAR indicators; Review of consistency of data/information within the Report as well as between the Report and source; Engagement through discussions with personnel at both corporate and plant/facility levels who are accountable for the data and information presented in the Report; Execution of an audit trail of claims and data streams, to determine the level of accuracy in collection, transcription, and aggregation; Review of data collection and management procedures, and related internal controls. Limitations & exclusions There are inherent limitations in assurance engagement, including, for example, the use of judgment and selective testing of data. Accordingly, there are possibilities that material misstatements in the sustainability information of the Report may remain undetected. The assurance scope specifically excludes: Data and information outside the defined reporting period (1st April 2024 to 31st March 2025); Review of the ‘economic and/or financial performance indicators’ included in the Report or on which reporting is based; specifically, some of the financial indicators and intensity metrices of BRSR are derived using Company’s audited financial information, and we relied on such audited records shared to us by the Company; Verification of carbon sequestration from plantation; the data from third-party assessment report shared by the Company was used for review; The Company’s statements and claims related to any topics other than those listed in the ‘Scope and boundary of assurance’; The Company's statements that describe qualitative/quantitative assertions, expression of opinion, belief, inference, aspiration, expectation, aim or future intention. Our observations Based on our review of the Report, we observed that the disclosures of the Company, covered under the ‘Scope and boundary of assurance’, are fairly reliable. Our conclusions Based on the scope of our review, we concluded the following: Reasonable Assurance of BRSR Core indicators: The disclosures of the BRSR Core indicators as mentioned in ‘Scope and boundary of assurance’ reasonably fulfil the criteria of relevance, completeness, reliability, neutrality, and understandability as per ‘reasonable’ assurance criteria; Limited Assurance of selected indicators for BRSR (other than core) and IAR: Based on the procedures performed, nothing has come to our attention that causes us not to believe that the non-financial disclosures of the Company are presented fairly, in all material respects, in accordance with the relevant reporting guidelines/standards. Our assurance team and independence BDO India LLP is a professional services firm providing services in Advisory, Assurance, Tax, and Business Advisory Services, to both domestic and international organizations across industry sectors. Our non-financial assurance practitioners for this engagement are drawn from a dedicated Sustainability and ESG Team in the organization. This team is comprised of multidisciplinary professionals, with expertise across the domains of sustainability, global sustainability reporting standards and principles, and related assurance standards. This team has extensive experience in conducting independent assurance of sustainability data, systems, and processes across sectors and geographies. As an assurance provider, BDO India LLP is required to comply with the independence requirements set out in the International Federation of Accountants (IFAC) Code of Ethics for Professional Accountants. Our independence policies and procedures ensure compliance with the Code. For BDO India LLP Dipankar Ghosh Partner | Sustainability & ESG Business Advisory Services Gurugram, Haryana 30 April 2025 Integrated Annual Report 2024-25364
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Appendix 1 The indicators considered for assurance in this engagement, based on GRI Standard, BRSR Framework and Company’s Internal Criteria, are listed below. A. BRSR Core Indicators Sr. No. Principle/ Indicator/ Reference Attribute Parameter 1 Principle 6-E7 Green-house gas (GHG) footprint 1. Total scope 1 emissions 2. Total scope 2 emissions 3. GHG emission Intensity (Scope 1 + 2): a) Total Scope 1 and Scope 2 emissions per rupee of turnover b) Total Scope 1 and Scope 2 emission per rupee of turnover adjusted for Purchasing Power Parity (PPP) c) Total Scope 1 and Scope 2 emission intensity in terms of physical output 2 Principle 6-E3 Principle 6-E4 Water footprint 1. Total water withdrawn 2. Total volume of water consumption 3. Water consumption intensity: a) Water consumption per rupee of turnover b) Water consumption per rupee of turnover adjusted for Purchasing Power Parity (PPP) c) Water intensity in terms of physical output 4. Water Discharge by destination and levels of Treatment 3 Principle 6-E1 Energy footprint 1. Total energy consumed 2. % of energy consumed from renewable sources 3. Energy intensity: a) Energy consumed per rupee of turnover b) Energy consumed per rupee of turnover adjusted for Purchasing Power Parity (PPP) c) Energy intensity in terms of physical output 4 Principle 6 – E9 Embracing circularity- details related to waste management by the entity 1. Total waste generated 2. Waste generated intensity: a) Waste generated per rupee of turnover b) Waste generated per rupee of turnover adjusted for Purchasing Power Parity (PPP) c) Waste intensity in terms of physical output 3. For each category of waste generated, total waste recovered through recycling, re-using or other recovery operations 4. For each category of waste generated, total waste disposed by nature of disposal method 5 Principle 3 – E1(C) Principle 3 – E11 Enhancing employee wellbeing and Safety 1. Spending on measures towards well- being of employees and workers- cost incurred as a % of total revenue of the company. 2. Details of safety related incidents for employees and workers a) Lost Time Injury Frequency Rate (LTIFR) (per one million- person hours worked) b) Total recordable work-related injuries c) No. of fatalities d) High consequence work-related injury or ill-health (excluding fatalities) 6 Principle 5 – E3(b) Principle 5 – E7 Enabling Gender Diversity in Business 1. Gross wages paid to females as a % of total wages paid 2. Complaints on POSH a) Total Complaints reported under Sexual Harassment on of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH) b) Complaints on POSH as a % of female employees / workers c) Complaints on POSH upheld 7 Principle 8 – E4 Principle 8 – E5 Enabling Inclusive Development 1. Input material sourced from following sources as % of total purchases Directly sourced from MSMEs/ small producers and directly from within India 2. Job creation in smaller towns- wages paid to people employed in smaller towns (permanent or non-permanent/on contract) as % of total wage cost 8 Principle 9 – E7 Principle 1 – E8 Fairness in Engaging with Customers and Suppliers 1. Instances involving loss/ breach of data of customers as a percentage of total data breaches or cyber security events 2. Number of days of accounts payable 9 Principle 1 – E9 Open-ness of business 1. Concentration of purchases & sales done with trading houses, dealers, and related parties a) Purchases from trading houses as % of total purchases b) Number of trading houses where purchases are made from c) Purchases from top 10 trading houses as % of total purchases from trading houses d) Sales to dealers / distributors as % of total sales e) Number of dealers / distributors to whom sales are made f) Sales to top 10 dealers / distributors as % of total sales to dealers / distributors Corporate Overview Statutory Reports Financial Statements L&T Finance 365
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2. Loans and advances & investments with related parties Share of RPTs (as respective %age) in: a) Purchases b) Sales c) Loans & advances d) Investments B. BRSR Non-Core Indicators Sr. No. Principle Reference Attribute Indicator Description 1 Principle 1 – E1 Percentage coverage by training and awareness programmes on any of the principles during the financial year 1. BOD 2. KMP 3. Employees other than BoD and KMP 4. Workers 2 Principle 2 – E2 Sustainable Sourcing 1. Does the entity have procedures in place for sustainable sourcing? (Yes/No) 2. If yes, what percentage of inputs were sourced sustainably? 3 Principle 3- E8 Training given to employees and workers. 1. On Health and safety measures 2. On Skill upgradation 4 Principle 3- E9 Performance and career development reviews of employees and worker 1. Male 2. Female 5 Principle 5- E1 Training on human rights. 1. Training for permanent employees 2. Training for non-permanent employees 6 Principle 5- E2 Minimum wages paid to employees 1. Equal to minimum wage 2. More than minimum wage 7 Principle 5- E3 (a) Median remuneration / wages 1. BOD 2. KMP 3. Employees other than BoD and KMP 4. Workers C. GRI Indicators Sr. No. Indicator Reference Indicator Description 1 2-7 Employees 2 3-1 Process to determine material topics 3 302-1 Energy consumption within the organization 4 303-5 Water consumption 5 305-1 Direct (Scope 1) GHG emissions 6 305-2 Energy indirect (Scope 2) GHG emissions 7 305-3 Other indirect (Scope 3) GHG emissions Specific Categories: Category 1: Purchased goods and services Category 2: Capital Goods Category 3: Fuel- and Energy-Related Activities Category 5: Waste Generated in Operations Category 6: Business travel Category 7: Employee Commute Category 8: Upstream leased assets 8 306-3 Waste generated 9 306-4 Waste diverted from disposal 10 306-5 Waste directed to disposal 11 401-1 New employee hires and employee turnover 12 401-3 Parental leaves 13 404-1 Average learning hours per year per employee 14 405-1 Diversity of governance bodies and employees 15 305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions D. Internally defined management criteria Sr. No. Indicator title Indicator Description 1 Responsible lending Responsible lending to women entrepreneurs (no. of active women borrowers who received micro loans) 2 Water Replenishment Water Replenishment considering storage capacity and type of soil of water structure and run off days calculated using SCS-CN (soil curve number) method 3 Carbon Sequestration Carbon sequestration calculation basis guidance in clean Development Mechanism (CDM) A/R (Afforestation/reforestation) methodology Notes: 1. For BRSR indicators, “E” denotes Essential Indicators and “L” denotes Leadership Indicators. Integrated Annual Report 2024-25366
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GRI INDEX GRI Standard Disclosures Last Year IAR (Y/N) Chapter Reference Section Reference Page No. GRI 2: General Disclosures 2021 2-1 Organisational details Y Who We Are Who We Are 8-9 2-2 Entities included in the organisation’s sustainability reporting Y About the Report About the Report 2-3 2-3 Reporting period, frequency and contact point Y About the Report About the Report 2-3 2-5 External assurance Y About the Report About the Report 2-3 2-6 Activities, value chain and other business relationships Y Social and Relationship Capital Customer Centricity, Strengthening Value Chain Partnerships for Sustainable Growth 263 272-273 2-7 Employees Y Human Capital Maintaining Diversity, Equity and Inclusion in Workforce 230 2-9 Governance structure and composition Y Corporate Governance Board of Directors 36-37 2-10 Nomination and selection of the highest governance body Y Corporate Governance Board of Directors, Board Committees 36-37, 44-57 2-11 Chair of the highest governance body Y Corporate Governance Board of Directors, Board Committees 36-37, 44-57 2-12 Role of the highest governance body in overseeing the management of impacts Y Board of Directors, Corporate Governance Board Committees 44-57 2-13 Delegation of responsibility for managing impacts Y Corporate Governance Board Committees 44-57 2-14 Role of the highest governance body in sustainability reporting Y Corporate Governance Board Committees 44-57 2-15 Conflicts of interest Y Corporate Governance Policies Guiding Ethical Behaviour 58-60 2-16 Communication of critical concerns Y Corporate Governance Policies Guiding Ethical Behaviour 58-60 2-17 Collective knowledge of the highest governance body Y Board of Directors, Corporate Governance Board Expertise and Development 40-41 2-18 Evaluation of the performance of the highest governance body Y Corporate Governance Performance Evaluation 38-39 Corporate Overview Statutory Reports Financial Statements L&T Finance 367
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GRI Standard Disclosures Last Year IAR (Y/N) Chapter Reference Section Reference Page No. 2-19 Remuneration policies Y Corporate Governance Nomination and Remuneration Committee 46-47 2-20 Process to determine remuneration Y Corporate Governance Nomination and Remuneration Committee 46-47 2-21 Annual total compensation ratio Y Human Capital Gender Representation & Pay Equity 231 2-22 Statement on sustainable development strategy Y About the Report, Chairman's message, ESG@LTF About the Report, Chairman's Message & MD and CEO’s Message, ESG@LTF 2-3, 18-27, 124 2-23 Policy commitments Y Corporate Governance Policies Guiding Ethical Behaviour, ESG Risk Management 58-60, 62 2-24 Embedding policy commitments Y Corporate Governance Policies Guiding Ethical Behaviour, ESG Risk Management 58-60, 62 2-25 Processes to remediate negative impacts Y Manufactured and Intellectual Capital, Human Capital Incident Management, Employee Grievance Redressal Mechanism 216, 244 BRSR Section A 320-321 2-26 Mechanisms for seeking advice and raising concerns Y Corporate Governance Vigil Mechanism 58 2-27 Compliance with laws and regulations Y Corporate Governance Policies Guiding Ethical Behaviour 58-60 2-28 Membership associations Y Corporate Governance Policy Advocacy and Industry Association 63 2-29 Approach to stakeholder engagement Y Stakeholder Engagement Stakeholder Engagement 148-151 GRI 3: Material Topics 2021 3-1 Process to determine material topics Y Materiality Assessment Double Materiality Assessment Process 153-157 3-2 List of material topics Y Materiality Assessment Refining Materiality 156-157 3-3 Management of material topics Y Materiality Assessment Refining Materiality 153-181 Integrated Annual Report 2024-25368
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GRI Standard Disclosures Last Year IAR (Y/N) Chapter Reference Section Reference Page No. GRI 201: Economic Performance 2016 201-1 Direct economic value generated and distributed Y Financial Capital Consolidated Statement of Economic Value Generated and Distributed for FY25 195 201-2 Financial implications and other risks and opportunities due to climate change Y Materiality Assessment Refining Materiality 158-181 201-3 Defined benefit plan obligations and other retirement plans Y BRSR Principle 3 336 GRI 202: Market Presence 2016 202-1 Ratios of standard entry level wage by gender compared to local minimum wage N BRSR Principle 5 344 GRI 203: Indirect Economic Impacts 2016 203-1 Infrastructure Investments and services supported Y Manufactured and Intellectual, Social, Relationship and Natural Capital Customer Centricity, Empowering Communities, Commitment to Water Stewardship, Rooting for a Greener Tomorrow 363-370, 274-292, 310-311, 312-314 203-2 Significant indirect economic impacts Y Social and Relationship Capital Driving Purpose, Empowering Communities 274-292 GRI 205: Anti- corruption 2016 205-2 Communication and training about anti-corruption policies and procedures Y Corporate Governance Policies Guiding Ethical Behaviour, Value Chain Governance 59, 63 205-3 Confirmed incidents of corruption and actions taken Y BRSR Principle 1 331 GRI 206: Anti- Competitive Behaviour 2016 206-1 Legal actions for anti-competitive behaviour, anti-trust, and monopoly practices Y Corporate Governance Policies Guiding Ethical Behaviour 58-60 GRI 207: Tax 2019 207-1 Approach to tax N Financial Capital Tax Strategy 197 207-2 Tax governance, control, and risk management N Financial Capital Tax Strategy 197 207-3 Stakeholder engagement and management of concerns related to tax N Financial Capital Tax Strategy 197 Corporate Overview Statutory Reports Financial Statements L&T Finance 369
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GRI Standard Disclosures Last Year IAR (Y/N) Chapter Reference Section Reference Page No. GRI 302: Energy 2016 302-1 Energy consumption within the organisation Y Natural Capital Reducing Emissions, Energising Sustainability 303 BRSR Principle 6 348-349 302-2 Energy consumption outside of the organisation Y Natural Capital Reducing Emissions, Energising Sustainability 303 BRSR Principle 6 348-349 302-3 Energy intensity Y BRSR Principle 6 348-349 302-4 Reduction of energy consumption Y BRSR Principle 6 354-355 GRI 303: Water and Effluents 2018 303-1 Interactions with water as a shared resource Y Natural Capital Commitment to Water Stewardship 310-312 303-2 Management of water discharge- related impacts Y Natural Capital Commitment to Water Stewardship 310-312 303-3 Water withdrawal Y BRSR Principle 6 349-350 303-4 Water discharge Y BRSR Principle 6 349-350 303-5 Water consumption Y BRSR Principle 6 349-350 GRI 304: Biodiversity 2016 304-3 Habitats protected or restored Y Natural Capital Rooting for a Greener Tomorrow 312-314 GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG emissions Y Natural Capital Reducing Emissions, Energising Sustainability 303-308 305-2 Energy indirect (Scope 2) GHG emissions Y Natural Capital Reducing Emissions, Energising Sustainability 303-308 305-3 Other indirect (Scope 3) GHG emissions Y Natural Capital Reducing Emissions, Energising Sustainability 303-308 305-5 Reduction of GHG emissions Y ESG@LTF Performance ESG in FY25 138 305-7 Nitrogen oxides (NOx), sulphur oxides (SOx), and other significant air emissions Y Natural Capital Air Emissions 309 Integrated Annual Report 2024-25370
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GRI Standard Disclosures Last Year IAR (Y/N) Chapter Reference Section Reference Page No. GRI 306: Waste 2020 306-1 Waste generation and significant waste-related impacts Y Natural Capital Forging Responsible Waste Management 311-312 306-2 Management of significant waste- related impacts Y Natural Capital Forging Responsible Waste Management 311-312 306-3 Waste generated Y BRSR Principle 6 352-353 306-4 Waste diverted from disposal Y BRSR Principle 6 352-353 306-5 Waste directed to disposal Y BRSR Principle 6 352-353 GRI 308: Supplier Environmental 308-1 New suppliers that were screened using environmental criteria Y Corporate Governance, Social and Relationship Capital Third-party Code of Conduct, Value Chain Engagement 60, 272-273 308-2 Negative environmental impacts in the supply chain and actions taken Y Corporate Governance Third-party Code of Conduct, Value Chain Engagement 60, 272-273 GRI 401: Employment 2016 401-1 New employee hires and employee turnover Y Human Capital Talent Attraction 234-235 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees Y Human Capital Talent Retention 243-246 BRSR Principle 3 335-337 401-3 Parental leave Y Human Capital Maintaining Diversity, Equity and Inclusion in Workforce Employee Remuneration and Benefits 233 246 BRSR Principle 3 335, 337 Corporate Overview Statutory Reports Financial Statements L&T Finance 371
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GRI Standard Disclosures Last Year IAR (Y/N) Chapter Reference Section Reference Page No. GRI 403: Occupational Health and Safety 2018 403-1 Occupational health and safety management system Y Human Capital Employee Health and Safety 247-250 403-2 Hazard identification, risk assessment, and incident investigation Y Human Capital Employee Health and Safety 247-250 403-3 Occupational health services Y Human Capital Employee Health and Safety 247-250 403-4 Worker participation, consultation, and communication on occupational health and safety N Human Capital Employee Health and Safety 247-250 403-5 Worker training on occupational health and safety N Human Capital Employee Health and Safety 247-250 403-6 Promotion of worker health Y Human Capital Employee Health and Safety 247-250 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships Y Human Capital Employee Health and Safety 247-250 403-8 Workers covered by an occupational health and safety management system N Human Capital Employee Health and Safety 247-250 403-9 Work-related injuries Y BRSR Principle 3 339 GRI 404: Training and Education 2016 404-1 Average hours of training per year per employee Y Human Capital Talent Deployment and Progression 236-241 404-2 Programmes for upgrading employee skills and transition assistance programs Y Human Capital Talent Deployment and Progression 236-241 404-3 Percentage of employees receiving regular performance and career development reviews Y BRSR Principle 3 338 GRI 405: Diversity and Equal Opportunity 2016 405-1 Diversity of governance bodies and employees Y Corporate Governance Board of Directors 36-37 405-2 Ratio of basic salary and remuneration of women to men Y Human Capital Maintaining Diversity, Equity and Inclusion in Workforce 231 BRSR Principle 5 345 GRI 406: Non- discrimination 2016 406-1 Incidents of discrimination and corrective actions taken Y BRSR Principle 5 346 GRI 407: Freedom of Association and Collective Bargaining 2016 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk N BRSR Principle 3 337 Integrated Annual Report 2024-25372
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GRI Standard Disclosures Last Year IAR (Y/N) Chapter Reference Section Reference Page No. GRI 408: Child Labor 2016 408-1 Operations and suppliers at significant risk for incidents of child labour Y Social and Relationship Capital Value Chain Engagement 272-273 GRI 409: Forced or Compulsory Labor 2016 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labour Y Social and Relationship Capital Value Chain Engagement 272-273 GRI 413: Local Communities 2016 413-1 Operations with local community engagement, impact assessments, and development programs Y Social and Relationship Capital Driving Purpose, Empowering Communities 274-292 413-2 Operations with significant actual and potential negative impacts on local communities Y Social and Relationship Capital Driving Purpose, Empowering Communities 274-292 GRI 414: Supplier Social Assessment 2016 414-1 New suppliers that were screened using social criteria Y Corporate Governance, Social and Relationship Capital Third-party Code of Conduct, Value Chain Engagement 60, 272-273 414-2 Negative social impacts in the supply chain and actions taken Y Corporate Governance, Social and Relationship Capital Third-party Code of Conduct, Value Chain Engagement 60, 272-273 GRI 415: Public Policy 2016 415-1 Political contributions N Corporate Governance Policies Guiding Ethical Behaviour 59 GRI 418: Customer Privacy 2016 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data Y Manufactured and Intellectual Capital, Social and Relationship Capital Data Privacy and Security, Safety of Customer Information 217, 268 BRSR Principle 9 361-362 Corporate Overview Statutory Reports Financial Statements L&T Finance 373
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TCFD DISCLOSURE TCFD Pillar Recommended Pillar Chapter Page No. Governance Board’s oversight of climate-related risks and opportunities Corporate Governance: Governance Framework Corporate Social Responsibility (CSR) and ESG & RMC ESG Governance ESG Related Risks 29 48-49 61 77 Natural Capital: An Environmentally Conscious Approach and Building Climate Resilience 297-300 ESG@LTF: ESG Strategy 130 Management’s role in assessing and managing climate-related risks and opportunities Corporate Governance: ESG Governance ESG Related Risks 61 77 Natural Capital: Building Climate Resilience 300 ESG@LTF: Strengthening of the ESG Governance structure – the corner stone of LTF’s excellence ESG Strategy 126 130 Strategy Climate-related risks and opportunities the organisation has identified over the short, medium, and long-term Materiality Assessment: Material Topics 168-169, 170- 171, 176-177 Natural Capital: An Environmentally Conscious Approach and Building Climate Resilience Reducing Emissions, Energising Sustainability 299-301 303 Impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning Financial Capital: The Sustainable Finance Framework (SFF) 200 Social and Relationship Capital: Climate Impact Management 285-287 Materiality Assessment: Material Topics 168-169, 170- 171, 176-177 Natural Capital: An Environmentally Conscious Approach and Building Climate Resilience Reducing Emissions, Energising Sustainability 299-301 303 Integrated Annual Report 2024-25374
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TCFD Pillar Recommended Pillar Chapter Page No. Resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2-degree or lower scenario Natural Capital: Building Climate Resilience and Assessing Climate Risk in line with TCFD 299-301 Risk Management Organisation’s processes for identifying and assessing climate-related risks Management Discussion and Analysis: Risk Management 106 Corporate Governance: ESG-Related Risks 77 Natural Capital: An Environmentally Conscious Approach and Building Climate Resilience Reducing Emissions, Energising Sustainability 299-301 303 Organisation’s processes for managing climate-related risks Corporate Governance: Broad Risk Framework ESG-Related Risks 76 77 Social and Relationship Capital: Strengthening Value Chain Partnerships for Sustainable Growth 272-273 Materiality Assessment: Material Topics 168-169, 170- 171, 176-177 ESG@LTF: Integrating ESG into Operations Leveraging Sustainable Finance 132-134 146 Processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management Corporate Governance: Broad Risk Framework ESG-Related Risks 76 77 Social and Relationship Capital: Strengthening Value Chain Partnerships for Sustainable Growth 272-273 Materiality Assessment: Material Topics 168-169, 170- 171, 176-177 ESG@LTF: Integrating ESG into Operations Leveraging Sustainable Finance 132-134 146 Corporate Governance: Broad Risk Framework ESG-Related Risks 76 77 Corporate Overview Statutory Reports Financial Statements L&T Finance 375
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TCFD Pillar Recommended Pillar Chapter Page No. Metrics and Targets Metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process Materiality Assessment: Translating Commitment into Measurable Change 182-187 ESG@LTF: Leveraging Sustainable Finance 146 Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks Management Discussion and Analysis: Environmental Social and Governance (ESG) 113 ESG@LTF: ESG Performance in FY25 138-140 Natural Capital: Reducing Emissions, Energising Sustainability Financing for a Better Planet Rooting for a Greener Tomorrow 295 303-308 309 312-313 BRSR: P6 352, 353, 355 Targets used by the organisation to manage climate-related risks and opportunities and performance against targets Materiality Assessment: Translating Commitment into Measurable Change 182-187 ESG@LTF: Leveraging Sustainable Finance 146 Integrated Annual Report 2024-25376
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Name of Policy/Document Anti-Corruption Policy Code of Conduct CSR Policy Data Privacy Policy Diversity, Equity and Inclusion Policy Dividend Distribution Policy Environment Policy ESG Policy E-Waste Policy Grievance Redressal Policy Health and Safety Policy Human Rights Policy Policy on Appointment/Remuneration/Compensation for Director, Senior Management Personnel, KMP and Others Policy on Board Diversity Policy for Determining Material Subsidiaries Policy on Related Party Transactions Policy on Vigil Mechanism Sustainable Procurement Policy Third-Party Code of Conduct Policy COMPENDIUM Corporate Overview Statutory Reports Financial Statements L&T Finance 377
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Integrated Annual Report 2024-25378 BOARD’S REPORT Dear Members, The Directors of your Company have the pleasure in presenting the Seventeenth Annual Report together with the audited financial statements for the financial year (“FY”) ended March 31, 2025. FINANCIAL RESULTS The summary of the Company’s financial results, both on a consolidated and standalone basis, for FY25 as compared to the previous FY i.e., FY24 is given below: (r in Cr) Consolidated Standalone 2024–25 2023–24 2024–25 2023–24 Total income 15,940.98 14,051.05 15,930.12 14,043.80 Less: Total expenses 12,449.72 11,022.02 12,475.19 11,057.16 Profit before exceptional items and tax 3,491.26 3029.03 3,454.93 2,986.64 Exceptional items – – – – Profit before tax 3,491.26 3029.03 3,454.93 2,986.64 Less: Tax expense 847.84 711.90 837.12 700.41 Profit after tax 2,643.42 2,317.13 2,617.81 2,286.23 Add: Share in profit of associate company – – – – Net profit after tax and share in profit of associate company 2,643.42 2,317.13 2,617.81 2,286.23 Profit for the year 2,643.42 2,317.13 2,617.81 2,286.23 Add: Loss attributable to Non Controlling Interest (0.24) (2.97) – – Profit for the year (owners of the Company) 2,643.66 2,320.10 2,617.81 2,286.23 Actuarial gain on defined benefit plan (gratuity) net of income tax (2.28) 3.52 (2.27) 3.51 Total comprehensive income for the year (owners of the Company) 2,641.38 2,323.62 2,615.54 2,289.74 Add: Balance brought forward from previous year 7,649.06 6,299.30 3,422.21 2,106.29 Balance Available 10,290.44 8,622.92 6,037.75 4,396.03 Appropriations Dividend paid (including dividend distribution tax) 622.46 496.61 622.46 496.61 Transfer to/(from) Reserve u/s 45-IC of Reserve Bank of India Act, 1934 523.56 457.25 523.56 457.25 Transfer to Reserve u/s 36(1)(viii) of Income Tax Act, 1961 10.00 20.00 10.00 20.00 Others 0.01 – 0.01 (0.04) Surplus in the Statement of Profit and Loss 9,134.43 7,649.06 4,881.72 3,422.21 Figures for the previous year have been regrouped/re-classified to confirm to the figures of the current year. FINANCIAL PERFORMANCE HIGHLIGHTS The Company’s performance during the year ended March 31, 2025 in comparison with the year ended March 31, 2024 is summarized as follows: Consolidated • Total income was r 15,940.98 Cr in FY25 as compared to r 14,051.05 Cr in FY24. • Profit before exceptional items and tax was r 3,491.26 Cr in FY25 as compared to r 3,029.03 Cr in FY24. • Profit for the year attributable to owners of the Company was r 2,643.66 Cr in FY25 as compared to r 2,320.10 Cr in FY24. During the year, the net loan book increased from r 81,359.39 Cr to r 93,773.06 Cr primarily on account
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Corporate Overview Statutory Reports Financial Statements L&T Finance 379 of growth in retail loan book and partially offset by reduction of the wholesale book in line with Lakshya 2026 strategy. Standalone • Total income was r 15,930.12 Cr in FY25 as compared to r 14,043.80 Cr in FY24. • Profit before taxes (including exceptional item) was r 3,454.93 Cr in FY25 as compared to r 2,986.64 Cr in FY24. • Profit for the year was r 2,617.81 Cr in FY25 as compared to r 2,286.23 Cr in FY24. APPROPRIATIONS As required u/s 45–IC of the Reserve Bank of India Act, 1934, r 523.56 Cr has been transferred to Special Reserve during the year (previous year r 457.25 Cr). COST RECORDS The Company is not required to maintain cost records as per the provisions of Section 148 (1) of the Companies Act, 2013 (“the Act”). INFORMATION ON THE STATE OF AFFAIRS OF THE COMPANY The information on the affairs of the Company has been given as part of the Management Discussion and Analysis section of the Report. During the year under review, your Company executed the business transfer agreement (“BTA”) and other ancillary documents (as applicable) for acquiring the gold loan business of Paul Merchants Finance Private Limited by way of slump sale on a going concern basis for a lumpsum consideration (“Proposed Transaction”). The Proposed Transaction is subject to fulfilment of conditions precedents stipulated in the BTA and such other approvals / consents as may be required. MATERIAL CHANGES AND COMMITMENTS There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year to which these financial statements relate and the date of the Board’s Report. DIVIDEND DISTRIBUTION POLICY The Dividend Distribution Policy of the Company approved by the Board of Directors (“Board”) is in line with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) and RBI regulations. The policy is available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the policy. DIVIDEND The Board has recommended a final dividend of r 2.75 per equity share (face value of r 10 each) subject to approval of the Members at the ensuing Annual General Meeting (“AGM”). The dividend recommended is in accordance with Dividend Distribution Policy. In terms of Ind AS 10, events after the reporting period as notified by the Ministry of Corporate Affairs, the proposed dividend of r 686.09 Cr is not recognised as liability as on March 31, 2025. The dividend, if approved at the ensuing AGM, would be paid to those Members whose names appear in the Register of Members maintained by the Registrar and Share Transfer Agents/Beneficial Owners maintained by the depositories as stated in notice of the ensuing AGM. CREDIT RATING During year under review, there have been no changes to the credit ratings assigned in FY24. During the year under review, CRISIL Ratings Limited (“CRISIL”), CARE Ratings Limited (“CARE”) India Ratings and Research Private Limited (“India Ratings”) and ICRA Limited (“ICRA”) have reviewed and reaffirmed the ratings as stated below: Rating agencies/ instrument type CRISIL CARE India Ratings ICRA Long-term Rating CRISIL AAA (Stable) CARE AAA (Stable) IND AAA (Stable) ICRA AAA (Stable) Short-term Rating CRISIL A1+ CARE A1+ IND A1+ ICRA A1+ Instrument-wise details of long-term ratings Non- Convertible Debentures CRISIL AAA (Stable) CARE AAA (Stable) IND AAA (Stable) ICRA AAA (Stable) Non- Convertible Debentures (Public Issue) CRISIL AAA (Stable) CARE AAA (Stable) IND AAA (Stable) ICRA AAA (Stable)
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Integrated Annual Report 2024-25380 Rating agencies/ instrument type CRISIL CARE India Ratings ICRA Long-Term rating of bank facilities CRISIL AAA (Stable) CARE AAA (Stable) IND AAA (Stable) ICRA AAA (Stable) Subordinate Debt CRISIL AAA (Stable) CARE AAA (Stable) IND AAA (Stable) ICRA AAA (Stable) Principal Protected Market Linked Debentures CRISIL PPMLD AAA (Stable) CARE PP-MLD AAA (Stable) IND PP-MLD AAA (Stable) PP-MLD ICRA AAA (Stable) Perpetual Debt - CARE AA+ (Stable) - ICRA AA+ (Stable) Instrument-wise details of short-term rating Commercial Paper CRISIL A1+ CARE A1+ - ICRA A1+ The instruments/ bank facilities with long term ratings of AAA are considered to have highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk. The instruments with long-term ratings of AA+ are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. The instruments with a short-term rating of A1+ are considered to have a very strong degree of safety regarding timely payment of financial obligations. Such instruments carry the lowest credit risk. FUND RAISING During the year under review, the Company met its funding requirements through issue of Non-Convertible Debentures, Commercial Papers, borrowings from bank, External Commercial Borrowings, Securitisation Borrowings (PTC), Treasury Bills Repurchase and Borrowings (including Repo Borrowings). As on March 31, 2025, the Company doesn’t have any listed green debt securities. During the year under review, the net borrowings saw an increase of r 15,706.03 Cr vis-a-vis a decline of r 6,502.58 Cr in the previous year. The aggregate debt outstanding as on March 31, 2025 was R 92,246.90 Cr. CHANGES TO THE SHARE CAPITAL During the year under review, the Company has issued 65,000 equity shares and 58,62,791 equity shares to employees of the Company pursuant to the exercise of stock options under the Employee Stock Option Scheme – 2010 and Employee Stock Option Scheme – 2013 (“ESOP Schemes”) respectively. Pursuant to the allotment of equity shares under the ESOP Schemes, the paid-up share capital of the Company was r 2,494.87 Cr as at March 31, 2025 as compared to r 2,488.94 Cr as at March 31, 2024. EMPLOYEE STOCK OPTION SCHEME There has been no change in the ESOP Schemes during the year under review. The ESOP Schemes are in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (“SBSE Regulations”). The disclosures required to be made under the Act and SBSE Regulations are available on the website of the Company at https://www.ltfinance.com/investors (click - ESOP Disclosure). The certificate from the Secretarial Auditor, confirming compliance with the aforesaid provisions has been appended as Annexure A to the Board’s Report. INVESTMENT IN SUBSIDIARIES During the year under review, the Company has not made any investments in its subsidiaries. RBI REGISTRATION The Company is a Non-Banking Financial Company- Investment and Credit Company (“NBFC-ICC”) registered with Reserve Bank of India (“RBI”), bearing reference number N-13.02052 dated August 2, 2024. STATUTORY DISCLAIMER RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the Company or for the correctness of any of the statements or representations made or opinions expressed by the Company and discharge of liabilities by the Company. FIXED DEPOSITS The Company being a non-deposit taking Non-Banking Financial Company (“NBFC”), has not accepted any deposits from the public during the year under review.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 381 DIRECTORS As on March 31, 2025, the composition of the Board is in accordance with the provisions of Section 149 of the Act and Regulation 17 of the SEBI Listing Regulations, with an appropriate combination of Executive Director, Non-Executive Directors and Independent Directors. The list of Directors of the Company has been disclosed as part of the Corporate Governance Report. Mr. Dinanath Dubhashi (DIN:03545900), who was re-designated as the Whole-time Director of the Company with effect from January 24, 2024 until April 30, 2024, ceased to be the Whole-time Director of the Company on account of completion of his tenure. During the year under review, in view of the termination of the investment agreement entered into between BC Asia Growth Investments, BC Investments VI Limited (collectively referred to as “Bain Capital”) and the Company in relation to the acquisition of shares (directly or indirectly) by Bain Capital and in accordance with the terms of the investment agreement, Mr. Pavninder Singh (DIN: 03048302) ceased to be a Director (Nominee Director) on the Board of the Company w.e.f. June 13, 2024. The Board records its deepest appreciation for the contribution by Mr. Dinanath Dubhashi (DIN:03545900) and Mr. Pavninder Singh (DIN: 03048302) during their tenure on the Board of the Company. The terms and conditions of appointment of Independent Directors are available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the policy. The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience, expertise (including proficiency, as applicable) and hold highest standards of integrity. Section 152 of the Act provides that unless the Articles of Association provide for retirement of all directors at every AGM, not less than two-third of the total number of directors of a public company (excluding the Independent Directors) shall be persons whose period of office is liable to determination by retirement of directors by rotation, of which one-third are liable to retire by rotation. Accordingly, Mr. Sudipta Roy (DIN: 08069653) will retire by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. Declaration by Independent Directors All Independent Directors have submitted the declaration of independence, pursuant to the provisions of Section 149(7) of the Act and Regulation 25(8) of the SEBI Listing Regulations, stating that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulations 16(1)(b) of the SEBI Listing Regulations and they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his/her ability to discharge his/ her duties with an objective independent judgment and without any external influence. Familiarization Programme The Company has familiarized the Independent Directors with the Company, their roles and responsibility in the Company, nature of industry in which the Company operates, business model of the Company, etc. Further, during the year under review, a dedicated AI bootcamp was organised specifically for the independent directors in light of the growing focus on AI highlighting how AI can help bring in business and operational efficiencies. The specific details of trainings are covered in the Business Responsibility & Sustainability Report (“BRSR”) forming part of the Report. Additionally, dedicated field visits (visits to the Company’s branches, dealers and CSR projects) were undertaken to familiarize the Directors with the on ground operations. The details relating to the familiarisation programme are available on the website of the Company at https://www.ltfinance.com/investors (click – Familiarisation Programme). Fit and Proper Criteria & Code of Conduct All the Directors meet the fit and proper criteria stipulated by RBI. All the Directors and Senior Management Personnel (“SMP”) of the Company under the SEBI Listing Regulations have affirmed compliance with the Code of Conduct of the Company. KEY MANAGERIAL PERSONNEL (“KMPs”) As on March 31, 2025, the Company had the following KMPs: 1) Mr. Sudipta Roy – Managing Director and Chief Executive Officer 2) Mr. Sachinn Joshi – Chief Financial Officer 3) Ms. Apurva Rathod – Company Secretary Mr. Dinanath Dubhashi was the Whole-time Director of the Company with effect from January 24, 2024 until April 30, 2024.
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Integrated Annual Report 2024-25382 During the period under review, apart from the aforesaid, there were no changes in the KMPs of the Company. POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION / COMPENSATION FOR DIRECTORS, SENIOR MANAGEMENT PERSONNEL, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES A. Background and objectives Section 178 of the Act and Regulation 19 read with Part D of Schedule II of the SEBI Listing Regulations, requires the Nomination and Remuneration Committee (“NRC”) to formulate a policy relating to the remuneration of the Directors, SMP/KMPs and other employees of the Company and recommend the same for approval of the Board. Further as per requirements of Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023, the Company is required to put in place a Board approved compensation policy. Further, Section 134 of the Act stipulates that the Board’s Report is required to include a statement on the Company’s policy on Directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of director and remuneration for KMPs and other employees (“the Policy”). In view of the aforesaid, the Board has, based on the recommendation of the NRC of the Company, approved the Policy which is available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the Policy. B. Brief framework of the Policy The objective of this Policy is: a) to guide the Board in relation to appointment and removal of Directors. b) to formulate criteria for evaluation of Independent Directors and the members of the Board. c) to evaluate the performance of the members of the Board including Independent Directors. d) to determine criteria for payment of remuneration/compensation to Directors, SMPs/KMPs and employees. e) to recommend to the Board, remuneration/ compensation payable to the Directors including SMPs, KMPs and employees, if required. f) to ensure relationship of remuneration/ compensation to performance is clear and meets appropriate performance benchmarks. C. Appointment of Director(s) – Criteria and requirements The NRC identifies and ascertains the integrity, professional qualification, areas of expertise and experience of the person, who is proposed to be appointed as a director and appropriate recommendation is made to the Board with respect to his/ her appointment to maintain balance, ensure effective functioning of the Board and ensure orderly succession planning. The Committee ensures that at least 1 (one) of the Directors on the Board has relevant experience of having worked in a Bank/NBFC. Appointment of Independent Directors is subject to the provisions of Section 149 of the Act read with Schedule IV and rules thereunder and SEBI Listing Regulations. The NRC satisfies itself that the proposed person satisfies the criteria of independence as stipulated under Section 149(6) of the Act and SEBI Listing Regulations, before the appointment as an Independent Director. No person is eligible to be appointed as a Director, if he/she is subject to any disqualifications as stipulated under the Act or any other law(s) for the time being in force. Appointment of a Director is subject to the provisions of the Act and rules thereunder, SEBI Listing Regulations, RBI regulations and other applicable regulations, as the case may be. Appointment of Managing Director and Whole-time Director is subject to the provisions of Sections 196, 197, 198 and 203 of the Act read with Schedule V and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, RBI regulations, SEBI Listing Regulations and such other applicable regulations. A person cannot occupy the position as a Managing Director/Whole-time Director beyond the age of seventy years, unless the appointment is approved by a special resolution passed by the Company in general meeting. No re-appointment is made earlier than 1 (one) year before the expiry of term.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 383 D. Evaluation criteria of Directors and SMPs / KMPs / Employees • Independent Directors / Non-Executive Directors The Board/NRC carries out evaluation of performance of Independent Directors/Non- Executive Directors every year ending March 31 on the basis of the following criteria: a) Membership & Attendance - Board and Committee meetings; b) Contribution during such meetings; c) Active participation in strategic decision making; d) Inputs to executive management on matters of strategic importance; e) Performance of the directors; f) Fulfilment of the independence criteria and their independence from the management, as applicable; and g) Such other matters, as the NRC/ Board may determine from time to time. • Executive Directors The NRC carries out evaluation of performance of Executive Directors (“EDs”) every year ending March 31. The evaluation is on the basis of key performance indicators (“KPIs”), which are identified well in advance for EDs and weights assigned for each measure of performance keeping in view the distinct roles of EDs. The identified KPIs for EDs are approved by the NRC or the Board, pursuant to recommendation of the NRC, if required. • SMPs / KMPs (other than EDs) / Employees The Human Resource (“HR”) department initiates the process of evaluation of the aforementioned persons every year ending March 31, with the Department Head(s)/ Management concerned. KPIs are identified well in advance at the commencement of the financial year. Performance benchmarks are set and evaluation of employees is done by the respective reporting Manager(s)/Management/ Department Head(s)/NRC as prescribed by law or regulator to determine whether the performance benchmarks are achieved. The payment of remuneration/compensation/ annual increment to the aforementioned persons is determined after the satisfactory completion of evaluation process. The HR department of the Company is authorised to design the framework for evaluating the EDs/SMPs/KMPs/employees. The objective of carrying out the evaluation by the Company is to identify and reward those with exceptional performances during the financial year. Training and development orientation programmes on a need basis are provided to employees, whose performance during any financial year does not meet the benchmark criteria. E. Criteria for Remuneration The NRC, while determining and/or recommending the criteria for remuneration/remuneration for Directors, SMPs/KMPs and other employees ensures that: a. the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully; b. the relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and c. the remuneration to Directors, SMPs and KMPs involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. The NRC with respect to SMPs and KMPs, further ensures that: i. the compensation levels are supported by the need to retain earnings of the Company and the need to maintain adequate capital based on Internal Capital Adequacy Assessment Process Policy; ii. the remuneration is reasonable, recognising all relevant factors including adherence to statutory requirements and industry practices; and iii. the remuneration/compensation packages may comprise of fixed and variable pay components aligned effectively with prudent risk taking to ensure that compensation is adjusted for all types of risks, the compensation outcomes are symmetric with risk outcomes, compensation pay-outs are sensitive to the
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Integrated Annual Report 2024-25384 time horizon of the risks, and the mix of cash, equity and other forms of compensation are consistent with risk alignment. During the year under review, the Policy was amended/updated to carry out changes required to be incorporated in accordance with the regulatory changes. PERFORMANCE EVALUATION Pursuant to the provisions of the Act and the SEBI Listing Regulations, the Board has carried out an annual evaluation of its own performance, performance of the Directors individually and the Committees of the Board. During the year under review, the NRC approved expansion of the evaluation criteria of the Stakeholders’ Relationship and Customer Protection Committee in line with the widened scope of the committee as specified in the Master Direction – Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2023. Manner of Evaluation The NRC and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, its Committees and individual directors is required to be carried out. It includes circulation of evaluation forms separately for evaluation of the Board and its Committees, Independent Directors/ Non-Executive Directors/ Executive Directors/ Managing Director and Chief Executive Officer and Chairman of the Board, as applicable. During the year under review, the aforesaid annual performance evaluation was conducted through an independent external service provider’s platform. The results of the evaluation were sent to the Chairman of the NRC, after which necessary feedback was provided to the NRC/ Board. This process ensured that the evaluation process was carried out in a confidential manner and independent feedback was obtained on the performance. The process of the annual performance evaluation broadly comprises: a) Board and Committee Evaluation: • Evaluation of Board as a whole and the Committees is done by the individual Directors/ members, followed by submission of collation to NRC and feedback to the Board by the NRC post discussion. b) Independent / Non-Executive Directors Evaluation: • Evaluation done by Board members excluding the Director being evaluated is received and individual feedback is provided to each Director as per the policy for performance evaluation of the Board/its Committees/ Directors. c) Chairperson / Managing Director and Chief Executive Officer Evaluation: • Evaluation as done by the individual directors is submitted to the Chairperson of the NRC and Chairperson of the NRC presents the feedback at the NRC meeting and subsequently at the Board meeting. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT In accordance with the requirements of Regulation 34 of the SEBI Listing Regulations, the Report includes the Company’s BRSR. The Company has followed the framework of the International Integrated Reporting Council (now known as Value Reporting Foundation), the Global Reporting Initiative (“GRI”) and the BRSR principles as prescribed by SEBI. REPORT ON CORPORATE GOVERNANCE The report on Corporate Governance for the year under review, is forming a part of the Board’s Report and the same is prepared in accordance with SEBI Listing Regulations and other applicable regulations, if any. The certificate from the Secretarial Auditor of the Company confirming compliance with the conditions of corporate governance is appended to the Corporate Governance Report. STATUTORY AUDITORS Pursuant to the provisions of Section 139(2) of the Act and the rules made thereunder and RBI requirements, the Members at their Sixteenth AGM held on June 25, 2024, had appointed M/s T. R. Chadha & Co. LLP , Chartered Accountants (ICAI Firm Registration Number: 006711N/N500028) and M/s Brahmayya & Co., Chartered Accountants (ICAI Firm Registration Number: 000515S) as the Joint Statutory Auditors of the Company for a term of 3 (three) years, i.e., from the conclusion of Sixteenth AGM till the conclusion of the Nineteenth AGM.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 385 STATUTORY AUDITORS’ REPORT The Auditors’ Report to the Members for the year under review is unmodified. The notes to the accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further clarifications under Section 134(3)(f) of the Act. SECRETARIAL AUDITOR Pursuant to the provisions of Regulation 24A of the SEBI Listing Regulations and in accordance with Section 204 of the Act, basis recommendation of the Board, the Company is required to appoint Secretarial Auditor, with the approval of the Members at its AGM. In light of the aforesaid, the Board of the Company has recommended the appointment of M/s Alwyn Jay & Co., Company Secretaries (Firm Registration Number P2010MH021500) as the Secretarial Auditor of the Company for a period of 5 (five) consecutive financial years, i.e.; from FY2025-26 up to FY2029-30, subject to approval of the Members at the ensuing AGM of the Company, to undertake secretarial audit as required under the Act and SEBI Listing Regulations and issue the necessary secretarial audit report for the aforesaid period. M/s Alwyn Jay & Co., Company Secretaries (Firm Registration Number: P2010MH021500) have confirmed that their appointment, if made, will comply with the eligibility criteria in terms of SEBI Listing Regulations. Further, the Secretarial Auditor has confirmed that they have subjected themselves to Peer Review process by the Institute of Company Secretaries of India (“ICSI”) and hold valid certificate issued by the Peer Review Board of ICSI. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Act, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI Listing Regulations, the Company had appointed M/s Alwyn Jay & Co., Company Secretaries (Firm Registration Number: P2010MH021500) to undertake the Secretarial Audit of the Company for FY25. Further, in terms of the regulatory requirements, M/s Alwyn Jay & Co. has issued the Annual Secretarial Compliance Report, confirming compliance by the Company of the applicable SEBI regulations and circulars/guidelines issued thereunder. The Secretarial Audit Report is appended as Annexure B to the Board’s Report. There is no adverse remark, qualification, reservation or disclaimer in the Secretarial Audit Report. REPORTING OF FRAUDS BY AUDITORS There were no frauds reported by the Auditors of the Company under Section 143(12) of the Act to the Audit Committee (“AC”). PARTICULARS OF EMPLOYEES The information required pursuant to the provisions of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company has been appended as Annexure C to the Board’s Report. In terms of second proviso to Section 136 of the Act, the Report and accounts are being sent to the Members and others entitled thereto, excluding the information on employees’ particulars as required pursuant to provisions of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The said information is available for inspection by the Members. The Board affirms that the remuneration paid to the employees of the Company is as per the policy on Directors’ appointment and remuneration/ compensation for Directors, Senior Management Personnel, Key Managerial Personnel and other employees and is in accordance with the requirements of the Act and SEBI Listing Regulations and none of the employees listed in the said Annexure are related to any Directors of the Company. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The details of conservation of energy, technology absorption and foreign exchange earnings and outgo of the Company are as follows: a. Conservation of Energy: The details regarding measures taken towards conservation of energy and capital investment thereof are covered as part of the Natural Capital section of the Report. b. Technology Absorption: The details pertaining to technology absorption at the Company (usage of digital and data analytics to build sustainable competitive advantage) are covered as part of the Management Discussion and
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Integrated Annual Report 2024-25386 Analysis section of the Report and Manufactured & Intellectual Capital section of the Report. c. Foreign Exchange Earnings and Outgo: There were no foreign exchange earnings during the year (previous year: Nil); while the expenditure in foreign currency by the Company during the year was r 193.02 Cr towards professional fees, license fees and finance cost (previous year: r 90.77 Cr towards professional fees) DEPOSITORY SYSTEM The Company’s equity shares are compulsorily tradable in electronic form. As on March 31, 2025, out of the Company’s total equity paid-up share capital comprising of 2,49,48,68,101 equity shares, only 6,139 equity shares were in physical form the rest being in dematerialised form. As per notifications issued by SEBI from time to time, requests for effecting transfer of securities are not processed unless the securities are held in the dematerialised form with the depositories. Further, transmission or transposition of securities held in physical or dematerialised form is also effected only in dematerialised form. Therefore, Members holding securities in physical form are requested to take necessary action to dematerialise their holdings. SUBSIDIARY AND ASSOCIATE COMPANIES As on March 31, 2025, the Company had 3 (three) subsidiaries. The list of the subsidiary companies is covered in the Corporate Governance section of the Report. MATERIAL SUBSIDIARIES There is no material subsidiary of the Company as on March 31, 2025. Further, as required under Regulations 16(1)(c) and 46 of the SEBI Listing Regulations, the Board has approved the policy for determining Material Subsidiaries which is available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the policy. PERFORMANCE AND FINANCIAL POSITION OF EACH SUBSIDIARY / ASSOCIATE AND JOINT VENTURE COMPANIES L&T Infra Investment Partners (“AIF Fund”) is a private investment fund focused on the Indian infrastructure sector. The AIF Fund is registered as a Category I Alternative Investment Fund Infrastructure Fund with SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012. L&T Infra Investment Partners Advisory Private Limited acts as an Investment Manager to the AIF Fund, whereas, L&T Infra Investment Partners Trustee Private Limited acts as the Trustee to the AIF Fund. The Company is the sponsor of the AIF Fund. L&T Financial Consultants Limited is inter alia engaged in the business of leasing of its own properties, rendering consultancy services and advising and assisting in due diligence, providing technical assistance, financing loans or advisory services. The highlights of performance of the businesses of subsidiaries are available on the website of the Company at https://www.ltfinance.com/investors. Further, as required under Rule 5 and Rule 8(1) of the Companies (Accounts) Rules, 2014, a report on the performance and financial position of each of the subsidiaries and associates of the Company has been appended as Annexure D to the Board’s Report. DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to the provisions of Section 134(5) of the Act, the Board confirm that, to the best of its knowledge and belief: 1) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; 2) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2025 and of the profit of the Company for that period; 3) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4) the Directors have prepared the annual accounts on a going concern basis; 5) the Directors have laid down internal financial controls to be followed by the Company and that
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Corporate Overview Statutory Reports Financial Statements L&T Finance 387 such internal financial controls are adequate and operating effectively; and 6) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. SECRETARIAL STANDARDS The Company has complied with all applicable Secretarial Standards issued by the ICSI on Board meetings and General meetings. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an internal control system, commensurate with the size, scale and complexity of its operations. Testing of such systems forms a part of review by the Internal Audit (“IA”) function. The scope and authority of the IA function is defined in the IA Charter in line with the Board approved Risk Based Internal Audit Policy. The IA function of the Company monitors and evaluates the efficacy and adequacy of the internal control system in the Company to ensure that financial reports are reliable, operations are effective and efficient and activities comply with applicable laws and regulations. Based on the report of the IA function, process owners undertake corrective action, if any, in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the AC of the Company from time to time. BOARD MEETINGS The details of the Board meetings held during FY25 are disclosed in the Corporate Governance Report. AUDIT COMMITTEE The Company has constituted an AC in terms of the requirements of the Act, Regulation 18 of the SEBI Listing Regulations and RBI regulations. The details of the same are disclosed in the Corporate Governance Report. CORPORATE SOCIAL RESPONSIBILITY In accordance with the requirements of the provisions of Section 135 of the Act, the Company has constituted a Corporate Social Responsibility (“CSR”) and ESG Committee. The composition and terms of reference of the CSR and ESG Committee are covered in the Corporate Governance Report. The Company has also formulated a CSR policy (“CSR Policy”) in accordance with the requirements of the Act containing details specified therein. The CSR Policy along with details of the projects approved by the Board are available on the website of the Company at https://www.ltfinance.com. Please refer to the section, Policy Compendium for accessing the CSR Policy. The Company has a strong commitment towards promoting inclusive social transformation in rural communities through its CSR efforts. The CSR interventions are aligned with the Sustainable Development Goals (“SDGs”), which indicate a holistic approach towards social responsibility. The project-based accountability approach with a focus on social impact, scale, and sustainability reflects the Company’s commitment to creating shared value for all stakeholders. During the year under review, no changes were made to the CSR Policy. During the year, the overall CSR spend at L&T Finance (including its subsidiaries) was R 30 Cr. The Company spent R 26.18 Cr in excess of its CSR obligations and the excess amount will be set off against the required 2% CSR budget over the next immediate succeeding financial years. The Company’s CSR efforts are well-aligned with its business objectives, regulatory requirements, and social responsibility principles. An annual report on activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure E to the Board’s Report. VIGIL MECHANISM Pursuant to Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 read with Section 177(9) of the Act and Regulation 22 of the SEBI Listing Regulations, the Company has adopted a Vigil Mechanism Framework, under which the Whistle Blower Investigation Committee has been set up. The objective of the framework is to establish a redressal forum, which addresses all concerns raised on questionable practices and through which all the stakeholders such as Employees, Directors and service providers (agency, vendor, contractor or any outsourced partner) can raise actual or suspected violations. The Vigil Mechanism Framework provides for adequate safeguards against victimization of the persons who use such mechanism and make provisions for direct access to chairman of AC.
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Integrated Annual Report 2024-25388 The effectiveness of the vigil mechanism is regularly reviewed by the AC, which ensures that all grievances are handled promptly and judiciously. The AC’s oversight ensures that the framework is accessible to all stakeholders and that it aligns with best practices. Necessary details pertaining to the framework are disclosed in the Corporate Governance Report. PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY The particulars of loans, guarantees, security and investments as per Section 186 of the Act by the Company, as applicable, have been disclosed in the financial statements. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES The Board has approved the policy on transactions with related parties (“RPT Policy”), pursuant to the recommendation of the AC. In line with the requirements of the Act, RBI regulations and the SEBI Listing Regulations, the Company has formulated the RPT Policy. The RPT Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and the related parties. The RPT Policy is available on the website of the Company at https://www.ltfinance.com/investors. Please refer to the section, Policy Compendium for accessing the RPT Policy. Key features of the RPT Policy are as under: • All transactions with related parties (“RPTs”) irrespective of its materiality and any subsequent material modification to any existing RPTs are referred to the AC of the Company for prior approval. The process of approval of RPTs by the AC, Board and shareholders is as under: a) Audit Committee: All RPTs and subsequent material modification, irrespective of whether they are in the ordinary course of business or at an arm’s length basis require prior approval of AC. Only those members of the AC who are independent directors approve the RPTs. RPTs to which the subsidiary of the Company is a party but the Company is not a party, require prior approval of the AC if the value of such transaction whether entered into individually or taken together with previous transactions during a financial year exceeds 10 (ten) per cent of the annual standalone turnover, as per the last audited financial statements of the subsidiary of the Company. Transaction between the Company or its subsidiaries with unrelated parties, the purpose and effect of which is to benefit the related party of the Company or any of its subsidiaries is an RPT and require prior approval of the AC. b) Board: Generally, all RPTs are in the ordinary course of business and at arm’s length price. RPTs which are not at arm’s length and which are not in the ordinary course of business and/or which requires shareholders’ approval, are approved by the Board. c) Shareholders: All material RPTs and subsequent material modification thereof, require approval of the shareholders, based on recommendation of the Board, through ordinary resolution passed at the general meeting. Where any contract or arrangement is entered into by a Director or any other employee without obtaining the consent of the Board or approval by an ordinary resolution in the general meeting, it is required to be ratified by the Board or the shareholders at a meeting, as the case may be, within 3 (three) months from the date on which such contract or arrangement was entered into. • Ratification of RPTs: The members of the AC, who are Independent Directors, may ratify RPTs within 3 (three) months from the date of the transaction or in the immediate next meeting of the AC, whichever is earlier, subject to the following conditions: a. The value of the ratified transaction(s) with a related party, whether entered into individually or taken together, during a financial year does not exceed R 1 Cr; b. The transaction is not material in terms of the provisions of Regulation 23(1) of the SEBI Listing Regulations; c. Rationale for inability to seek prior approval for the transaction is placed before the AC at the time of seeking ratification;
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Corporate Overview Statutory Reports Financial Statements L&T Finance 389 d. Details of ratification is disclosed along with the disclosures of related party transactions in terms of the provisions of Regulation 23(9) of the SEBI Listing Regulations; e. Any other condition as may be specified by the AC. Provided that failure to seek ratification of the AC would render the transaction voidable at the option of the AC and if the transaction is with a related party to any Director, or is authorised by any other Director, the Director(s) concerned is required to indemnify the Company against any loss incurred by it. The following are inter alia exempted from the approval requirements as per SEBI Listing Regulations and/or the Act: • transactions between Company and its wholly-owned subsidiary whose accounts are consolidated with the Company; • 2 (two) wholly-owned subsidiaries of the Company, whose accounts are consolidated with the Company; • transactions which are in the nature of payment of statutory dues, statutory fees or statutory charges entered into between the Company on one hand and the Central Government or any State Government or any combination thereof on the other hand. TRANSACTIONS WITH RELATED PARTIES All RPTs that were entered into during FY25 were on an arm’s length basis and in the ordinary course of business and disclosed in the Financial Statements. There were no materially significant RPTs made by the Company with Promoters, Directors, KMPs or body corporate(s), which had a potential conflict with the interest of the Company at large. Accordingly, the disclosure of RPTs as required under the provisions of Section 134(3) (h) of the Act in Form AOC-2 is not applicable. The Directors draw attention of the Members to notes to the Financial Statements which sets out related party disclosures. RISK MANAGEMENT FRAMEWORK The Company has constituted a Risk Management Committee (“RMC”) in terms of requirements of Regulation 21 of the SEBI Listing Regulations and RBI regulations and has also adopted an Enterprise Risk Management Policy. The details are covered as part of the Corporate Governance Report. The Company has a risk management framework and Board members are informed about risk assessment and minimization procedures and periodical review to ensure management controls risk by means of a properly designed framework. The AC and the Board are kept apprised of the proceedings of the meetings of the RMC. The Company, as it advances towards its business objectives and goals, is often subjected to various risks. Credit risk, market risk, liquidity risk, climate risk, transition risk, model risk, reputation risk, strategic risk and operational risk are some of the risks that your Company is exposed to and details of the same are covered in the Management Discussion and Analysis and Corporate Governance section of the Report. POLICY FOR PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE The Company has in place a policy for prevention, prohibition and redressal of sexual harassment at workplace. Further, the Company has constituted an Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, where complaints in the nature of sexual harassment can be registered. Appropriate reporting mechanisms are in place for ensuring protection against sexual harassment and the right to work with dignity. During the year under review, the Company had received 10 (ten) complaints in this regard out of which 1 (one) complaint was pending as on March 31, 2025 which has also been resolved as at the date of the Board’s Report. All complaints were satisfactorily resolved. ANNUAL RETURN The Annual Return in Form MGT-7 as required under Section 92(3) of the Act is available on the website of the Company at https://www.ltfinance.com/investors (click - Annual Return). SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders passed by the regulators/courts which would impact the going concern status of the Company and its future operations.
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Integrated Annual Report 2024-25390 RBI REGULATIONS The Company has complied with the applicable regulations of RBI. OTHER DISCLOSURES During the year under review, the Company has received an in-principle approval for appointment as User Agency and e-KYC User Agency, pending receipt of the license key from Unique Identification Authority of India. Subsequent to the merger of its subsidiaries with the Company, the Company had applied for registration as a NBFC-ICC. The Company continued to comply with the guidelines as applicable to NBFC- ICC in accordance with no-objection letter issued by RBI dated March 24, 2023 until the receipt by the Company of Certificate of Registration as NBFC–ICC dated August 2, 2024. The Company has not obtained any other registration/ license / authorisation, by whatever name called from any other financial sector regulators. ACKNOWLEDGEMENT The Directors express their sincere gratitude and appreciation towards all those who have contributed to the success of the Company during the past year. It is through the collective effort and dedication of many stakeholders that we have achieved our goals and milestones. We express our sincere gratitude to RBI, SEBI, BSE Limited, National Stock Exchange of India Limited, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies, other government and regulatory authorities, lenders, financial institutions and the Company’s bankers for the ongoing support extended by them. We would also like to thank our esteemed customers and shareholders. As we reflect on the accomplishments of the past year, we are deeply grateful for your unwavering support and partnership. Your loyalty and trust have been the cornerstone of our success, empowering us to overcome challenges and pursue new opportunities with confidence. We recognize the importance of your continued commitment, and we remain steadfast in our dedication to delivering value and excellence in all that we do. Lastly, we extend our deepest appreciation to our employees, whose hard work, commitment, and innovative ideas have been instrumental in driving our growth and success. Their unwavering dedication and professionalism have played a significant role in overcoming challenges and seizing opportunities. For and on behalf of the Board of Directors L&T Finance Limited (formerly known as L&T Finance Holdings Limited) S.N. Subrahmanyan Chairman DIN: 02255382 Sudipta Roy Managing Director and Chief Executive Officer DIN: 08069653 Place: Mumbai Date: April 25, 2025
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Corporate Overview Statutory Reports Financial Statements L&T Finance 391 COMPLIANCE CERTIFICATE [Pursuant to Regulation 13 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021] To, The Members, L&T Finance Limited (formerly known as L&T Finance Holdings Limited) We, Alwyn Jay & Co., Company Secretary in practice, have been appointed as the Secretarial Auditor vide a resolution passed at its meeting held on April 27, 2024 by the Board of Directors of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) (hereinafter referred to as “the Company”), having CIN: L67120MH2008PLC181833 and having its registered office at Brindavan, Plot No. 177, C.S.T Road, Kalina, Santacruz (East), Mumbai - 400098. This certificate is issued under Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (hereinafter referred to as “the Regulations”), for the year ended March 31, 2025. Management Responsibility: It is the responsibility of the Management of the Company to implement the scheme(s) including designing, maintaining records and devising proper systems to ensure compliance with the provisions of all applicable laws and regulations and to ensure that the systems are adequate and operate effectively. Verification: a) L&T Finance Limited Employee Stock Option Scheme 2010 and L&T Finance Limited Employee Stock Option Scheme 2013 (“the Schemes”) implemented by the Company is in accordance with Regulation 13 of the Regulations and b) the Schemes are in accordance with the special resolution passed by the Shareholders of the Company at the Extra Ordinary General Meeting held on November 29, 2010 for approval of the L&T Finance Limited Employee Stock Option Scheme 2010; special resolution passed by the shareholders of the Company through Postal Ballot on June 14, 2012 for ratification of L&T Finance Limited Employee Stock Option Scheme - 2010 instituted by the Company prior to the Initial Public Offer and special resolution passed by the shareholders of the Company through Postal Ballot on April 04, 2014 for approval of the L&T Finance Limited Employee Stock Option Scheme 2013. For the purpose of verifying the compliance of the Regulations, we have examined the following: 1. Scheme(s) received from/furnished by the Company; 2. Articles of Association of the Company; 3. Resolutions passed at the meeting of the Board of Directors; 4. Shareholders resolutions passed at the General Meeting(s); 5. Minutes of the meetings of the Nomination & Remuneration Committee; 6. Relevant Accounting Standards as prescribed by the Central Government; 7. Detailed terms and conditions of the scheme as approved by Nomination & Remuneration Committee; 8. Bank Statements towards Application money received under the scheme(s); 9. Exercise Price / Pricing formula; 10. Statement filed with recognised Stock Exchange(s) in accordance with Regulation 10 of these Regulations; 11. Disclosure by the Board of Directors; 12. Relevant provisions of the Regulations, Companies Act, 2013 and Rules made thereunder. ANNEXURE A TO BOARD’S REPORT
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Integrated Annual Report 2024-25392 Certification: In our opinion and to the best of our knowledge and according to the verifications as considered necessary and explanations furnished to us by the Company and its Officers, we certify that the Company has implemented the ESOP Scheme – 2010 and ESOP Scheme – 2013 in accordance with the applicable provisions of the Regulations and Resolutions of the Company in the General Meeting(s). Assumption & Limitation of Scope and Review: 1. Ensuring the authenticity of documents and information furnished is the responsibility of the Board of Directors of the Company. 2. Our responsibility is to give certificate based upon our examination of relevant documents and information. It is neither an audit nor an investigation. 3. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company. 4. This certificate is solely for your information and it is not to be used, circulated, quoted, or otherwise referred to for any purpose other than for the Regulations. Place : Mumbai Date : April 18, 2025 Office Address : Annex-103, Dimple Arcade, Asha Nagar, Kandivali (East), Mumbai - 400101. ALWYN JAY & Co. Company Secretaries Jay D’Souza FCS.3058 (Partner) Certificate of Practice No.6915 UDIN : F003058G000147026
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Corporate Overview Statutory Reports Financial Statements L&T Finance 393 FORM NO. MR-3 SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2025 [Pursuant to section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014] To, The Members, L&T FINANCE LIMITED (formerly known as L&T Finance Holdings Limited) We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by L&T Finance Limited (formerly known as L&T Finance Holdings Limited) (CIN: L67120MH2008PLC181833) (hereinafter called “the Company”). The Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon. Based on our verification of the Company’s statutory registers, books, papers, minute books, forms and returns filed and other records maintained by the Company and the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on March 31, 2025 complied with the statutory provisions listed hereunder and also that the Company has followed proper Board-processes and has required compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31, 2025 according to the provisions of: (i) The Companies Act, 2013 (“the Act”) and the Rules made thereunder; (ii) The Securities Contracts (Regulation) Act, 1956 (“SCRA”) and the Rules made thereunder; (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (iv) Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder for compliance to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings, as applicable; (v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) as amended from time to time:- (a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; (c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018; (d) The Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021; (e) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client – Not Applicable to the Company during the period under review; ANNEXURE B TO BOARD’S REPORT
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Integrated Annual Report 2024-25394 (f) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018 - Not Applicable to the Company during the period under review; (g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021 - Not applicable to the Company during the period under review; (h) The Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021; (i) The Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018. (vi) Other specific business/industry related laws applicable to the Company: The Company has complied with the Reserve Bank of India Act, 1934, Master Direction - Reserve Bank of India (Non-Banking Financial Company –Scale Based Regulation) Directions, 2023 Core Investment Companies (Reserve Bank) Directions, 2016, Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions, 2016, Non-Banking Financial Company Returns (Reserve Bank) Directions, 2016 and the other applicable general laws, rules, regulations and guidelines. We have also examined compliance with the applicable clauses of the following: (i) Secretarial Standards with regard to Meeting of Board of Directors (SS-1) and General Meetings (SS-2) issued by The Institute of Company Secretaries of India; and (ii) SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015. During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above. We further report that The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non- Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least 7 (seven) days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for a meaningful participation at the meeting. The minutes of the Board Meetings and Committee Meetings have not identified any dissent by members of the Board/Committee of the Board, hence we have no reason to believe that the decisions by the Board were not approved by all the directors present. The Minutes of the Board Meetings and Committee Meetings were duly approved at the meeting by the Chairman of the Meeting. We further report that there are adequate systems and processes in the Company commensurate with its size and operations, to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. As informed, the Company has responded appropriately to communication received from various statutory / regulatory authorities including initiating actions for corrective measures, wherever found necessary. We further report that during the audit period the following events/actions have taken place, having a major bearing on the Company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines and standards: 1. The Committee of Directors of the Company at its meeting held on February 7, 2025 has approved the proposal for acquisition of Gold Loan Business of Paul Merchants Finance Private Limited by way of slump sale on a going concern basis for a lumpsum consideration of R 537 crores along with certain adjustments to be done till closing. 2. Issue and allotment of 59,27,791 Equity Shares of R 10 each under the L&T Finance Limited Employee Stock Option Scheme – 2010 and L&T Finance Limited Employee Stock Option Scheme – 2013.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 395 3. During the financial year, the Company has allotted 3,37,800 Senior, Secured, Rated, Listed, Redeemable, Non-Convertible Debentures of R 1,00,000/- each for cash at par on a private placement basis. 4. During the financial year, the investment agreement dated September 21, 2015 (“Investment Agreement”) entered into between BC Asia Growth Investments, BC Investments VI Limited (collectively referred to as “Bain Capital”) and the Company in relation to the acquisition of shares (directly or indirectly) by Bain Capital stood terminated effective June 13, 2024 in accordance with the terms of the Investment Agreement on account of sale of entire shareholding by Bain Capital. 5. Subsequent to the merger of its subsidiaries with the Company, the Company had applied for registration as a Non-Banking Financial Company – Investment and Credit Company (NBFC – ICC). The Company continued to comply with the guidelines as applicable to NBFC-ICCs in accordance with no-objection letter issued by RBI dated March 24, 2023. The Company received the Certificate of Registration as NBFC – ICC during the financial year. 6. The Company has received an order dated August 7, 2024 for furnishing information in respect of the Financial Statements, Profit and Loss Accounts and other schedules, reports and documents annexed thereto and other documents filed by L&T Finance Limited (formerly known as L&T Finance Holdings Limited) from Ministry of Corporate Affairs, Registrar of Companies under Section 206(4) of the Companies Act, 2013. Accordingly, the Company has responded to ROC vide letter dated August 14, 2024 and provided all relevant information to ROC, Mumbai within the specified timelines and no further information has been requested for by the ROC. Place : Mumbai Date : April 18, 2025 Office Address : Annex-103, Dimple Arcade, Asha Nagar, Kandivali (East), Mumbai - 400101. ALWYN JAY & Co. Company Secretaries Jay D’Souza FCS.3058 (Partner) Certificate of Practice No.6915 UDIN : F003058G000146841 Note: This report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report.
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Integrated Annual Report 2024-25396 Annexure A To The Members, L&T FINANCE LIMITED (formerly known as L&T Finance Holdings Limited) Our Secretarial Audit Report of even date is to be read along with this letter. 1. The compliance of provisions of all laws, rules, regulations, standards applicable to L&T Finance Limited (formerly known as L&T Finance Holdings Limited) (hereinafter called “the Company”) is the responsibility of the management of the Company. Our examination was limited to the verification of records and procedures on test check basis for the purpose of issue of the Secretarial Audit Report. 2. Maintenance of secretarial and other records of applicable laws is the responsibility of the management of the Company. Our responsibility is to issue Secretarial Audit Report, based on the audit of the relevant records maintained and furnished to us by the Company, along with explanations where so required. 3. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial and other legal records, legal compliance mechanism and corporate conduct. Further, part of the verification was done on the basis of electronic data provided to us by the Company on test check basis to ensure that correct facts as reflected in secretarial and other records produced to us. We believe that the processes and practices we followed, provides a reasonable basis for our opinion for the purpose of issue of the Secretarial Audit Report. 4. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company. 5. Wherever required, we have obtained the management representation about list of applicable laws, compliance of laws, rules and regulations and major events during the audit period. 6. The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company. Place : Mumbai Date : April 18, 2025 Office Address : Annex-103, Dimple Arcade, Asha Nagar, Kandivali (East), Mumbai - 400101. ALWYN JAY & Co. Company Secretaries Jay D’Souza FCS.3058 (Partner) Certificate of Practice No.6915 UDIN : F003058G000146841
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Corporate Overview Statutory Reports Financial Statements L&T Finance 397 Sr. No. Particulars Name of Directors/ KMPs Disclosure 1 The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year.(1) S.N. Subrahmanyan – Sudipta Roy(2) 209.62 Dinanath Dubhashi(3) N.A. R. Shankar Raman – Thomas Mathew T. 14.91 Nishi Vasudeva 11.97 Rajani R. Gupte 12.93 R. Seetharaman 11.82 Pavninder Singh(4) – 2 The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year. (1) S.N. Subrahmanyan – Sudipta Roy Nil Dinanath Dubhashi(3) – R. Shankar Raman – Thomas Mathew T. (4.64%) Nishi Vasudeva(5) – Rajani R. Gupte (6.20%) R. Seetharaman(5) – Pavninder Singh(4) – Sachinn Joshi 8.50% Apurva Rathod 8.50% 3 The percentage increase in the median remuneration of employees in the financial year. 6% 4 The number of permanent employees on the rolls of Company. 36,521 5 Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification (6) thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. Employees other than managerial personnel Managerial personnel 5.70% 7.70% 6 Affirmation that the remuneration is as per remuneration policy of the Company We affirm that the remuneration is as per the nomination and remuneration policy of the Company. Notes: (1) For Non-Executive Directors (except Mr. S.N. Subrahmanyan and Mr. R. Shankar Raman who do not draw remuneration from the Company), fees and commission paid in respect of the Company as per the criteria and structure recommended by NRC and approved by Board are considered. There was no change in the commission structure during the year and the decrease, if any, is solely attributable to sitting fees for meetings (5 Board meetings in FY2024-25 vs 11 Board meetings in FY2023-24). (2) Remuneration includes variable remuneration payable for FY25, subject to approval of the NRC. (3) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024. PARTICULARS OF EMPLOYEES Information required pursuant to Section 197 read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 ANNEXURE C TO BOARD’S REPORT
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Integrated Annual Report 2024-25398 (4) Mr. Pavninder Singh ceased to be the Nominee Director w.e.f. June 13, 2024. (5) Dr. R. Seetharaman and Ms. Nishi Vasudeva were appointed / re-appointed in Q4FY24. (6) Increase in remuneration is after taking into consideration performance of an individual and the Company. For and on behalf of the Board of Directors L&T Finance Limited (formerly known as L&T Finance Holdings Limited) S.N. Subrahmanyan Chairman DIN: 02255382 Sudipta Roy Managing Director and Chief Executive Officer DIN: 08069653 Place: Mumbai Date: April 25, 2025
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Corporate Overview Statutory Reports Financial Statements L&T Finance 399 Form AOC - I [Pursuant to first proviso to sub-section (3) of Section 129 read with Rule 5 of the Companies (Accounts) Rules, 2014] Statement containing salient features of the financial statement of subsidiaries, associate companies and joint ventures ANNEXURE D TO BOARD’S REPORT Part - A: Subsidiaries (r in Cr) Sr. No. 1 2 3 Name of the subsidiary L&T Financial Consultants Limited L&T Infra Investment Partners Advisory Private Limited L&T Infra Investment Partners Trustee Private Limited Financial year ending on March 31, 2025 Reporting currency – – – Exchange rate on the last day of financial year – – – Date of acquisition – – – Share capital 27.75 5.00 0.10 Reserves and surplus 376.43 24.36 0.01 Total assets 462.38 30.65 0.16 Total liabilities 58.21 1.29 0.05 Investments 116.66 28.66 – Turnover 56.44 2.33 0.03 Profit before taxation 34.87 0.71 0.01 Provision for taxation 10.54 0.18 0.00 Profit after taxation 24.33 0.53 0.01 Proposed Dividend – – – % of shareholding 100% 100% 100% Name of subsidiaries which are yet to commence operations: Nil Names of subsidiaries which have been liquidated or sold during the year: Nil
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Integrated Annual Report 2024-25400 Part - B: Associate and Joint Venture [Statement pursuant to Section 129(3) of the Companies Act, 2013 related to Associate Company and Joint Venture] Name of Associate Grameen Capital India Private Limited 1. Latest audited Balance Sheet Date March 31, 2024 2. Date on which the Associate was associated June 5, 2015 3. Shares of Associate held by the company as at March 31, 2025 Number of shares 21,26,000 Amount of equity investment in Associate (R Cr) 2.13 Amount of preference investment in Associate (R Cr) 3.87 4. Holding % / Description of significant influence 26% of shareholding 5. Reason of non consolidation of the associate No significant influence as per IndAS 28 6. Networth attributable to Shareholding as per latest Audited Balance Sheet (R Cr) – 7. Profit/Loss for the year: – i. Considered in Consolidation (R Cr) – ii. Not Considered in Consolidation (R Cr) – Name of associates or joint ventures which are yet to commence operations: Nil Name of associates or joint ventures which have been liquidated or sold during the year: Nil For and on behalf of the Board of Directors L&T Finance Limited (formerly known as L&T Finance Holdings Limited) S.N. Subrahmanyan Chairman DIN: 02255382 Sudipta Roy Managing Director and Chief Executive Officer DIN: 08069653 Sachinn Joshi Chief Financial Officer Apurva Rathod Company Secretary Membership No.: A18314 Place: Mumbai Date: April 25, 2025
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Corporate Overview Statutory Reports Financial Statements L&T Finance 401 Annual Report on Corporate Social Responsibility (“CSR”) Activities [Pursuant to Companies (Corporate Social Responsibility Policy) Rules, 2014] 1) Brief outline on CSR policy of the Company CSR Vision: CSR Vision: Financial and digital transformation of rural communities and creating opportunities for sustainable livelihoods for them. CSR Mission: We strive to revitalize and create sustainable livelihoods and financial ecosystem of and for marginalized farmers, rural women and youth. CSR Thrust Areas: The CSR strategy revolves around 4 (four) key thrust areas, meticulously aligned with UN Sustainability Goals and actively contributing to national development objectives. The thrust areas of your Company as on March 31, 2025 include: 1. Digital & Financial Inclusion, exemplified by our flagship program “Digital Sakhi,” aimed at addressing Sustainable Development Goals (SDG) 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth). 2. Disaster Management, provides crucial relief aid to communities affected by natural calamities in line with SDG 11 (Sustainable Cities & Communities). 3. Climate Impact Management, ensures environmental sustainability, ecological balance, agroforestry, conservation of natural resources and maintaining quality of soil, air and water through initiatives such as “Project Prakruti”, “Jalvaibhav” and “Capacity Building of Water User Groups”, in line with SDGs 13 (Climate Action) and SDG 15 (Life on Land) 4. The diverse range of interventions under ‘Social Inclusion’ encompasses endeavors like skill training of youth for enhancing employability opportunities, road safety campaigns, and healthcare programs, all contributing to SDG 3 (Good Health and Well-being) and SDG 17 (Partnership for the goals). CSR Approach: A project-based accountability approach is adopted, emphasizing on the 3 (three) aspects of Social impact, Scale and Sustainability. Baseline and end line assessments are carried out for each project with clearly defined measurable results. Monitoring: A three-tier structure exists with the CSR & ESG Committee formulating and recommending the annual action plan to the Board, in line with the CSR vision of the Company. The CSR team conducts periodic review of the projects and documents the progress. The Board verifies that the CSR funds have been utilised for the projects as approved by it. ANNEXURE E TO BOARD’S REPORT
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Integrated Annual Report 2024-25402 2) Composition of CSR and ESG Committee: Sr. No. Name of Director Designation/Nature of Directorship Number of meetings of CSR and ESG Committee held during the year Number of meetings of CSR and ESG Committee attended during the year 1 Rajani R. Gupte Chairperson, Independent Director 1 1 2 Sudipta Roy Member, Managing Director and Chief Executive Officer 1 1 3 Dinanath Dubhashi(1) Member, Whole-time Director 1 1 4 R. Seetharaman Member, Independent Director 1 1 (1) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024. 3) Web-link where composition of CSR and ESG committee, CSR Policy and CSR projects approved by the Board are disclosed on the website of the Company: The composition of CSR and ESG Committee, CSR Policy and CSR projects approved by the Board can be accessed on the website at the following link - https://www.ltfinance.com/csr 4) The executive summary along with the web-link(s) of impact assessment of CSR projects carried out in pursuance of sub-rule (3) of Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, if applicable: A] Digital Sakhi Project: The Digital Sakhi program of the Company had a meaningful impact on the lives of rural women in villages of East Medinipur in West Bengal and Boudh and Balangir districts in Odisha. The program has provided training to rural women on Digital Financial Literacy (“DFL”), leadership and technology, which has enabled them to impart DFL training to people in their communities and also empower women entrepreneurs (“WE”). The social impact assessment study conducted by CRISIL Limited in FY25 across the 2 (two) projects in West Bengal and Odisha revealed the following outcomes: 1. Digital Sakhi – West Bengal: The Digital Sakhi program has played a pivotal role in empowering women in West Bengal by fostering financial independence and entrepreneurial spirit. Following the program, 92% of the Digital Sakhis expressed their intent to save regularly in banks, reflecting improved financial literacy and planning. Among them, 95% who started saving reported earning a 5% interest, reinforcing the benefits of formal financial systems. While 58% of the Digital Sakhis were homemakers earlier, after the intervention, the average monthly income for these Digital Sakhis increased from the range of R 2,670 to R 4,945. Additionally, the initiative also fueled economic participation, with 74% of participants launching their own businesses and 17% managing Digital Sewa Kendras. These outcomes highlight the program’s success in equipping women with the skills and confidence to navigate digital finance, enhance their livelihoods and contribute to their communities’ economic growth. The WE have played a transformative role in strengthening business acumen and financial management. A remarkable 99% of women confirmed that they regularly maintained account books after the program, ensuring better financial tracking and decision-making. The program has also fueled business growth, with 94% of participants attributing increased income to their enhanced skills and knowledge, while an equal percentage reported developing strategic plans for expansion. Additionally, 84% of women experienced a rise in customer base and sales, highlighting the program’s role in market expansion. The average current earning of WEs has reached R 14,000 per month, with a notable 94% confirming that training contributed to this income growth. Access
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Corporate Overview Statutory Reports Financial Statements L&T Finance 403 to finance also improved, with 76% securing loans at more favorable interest rates, enabling them to invest in and scale their enterprises. These outcomes showcase the WE program’s success in equipping WE with the tools, confidence, and resources to drive sustainable business growth and financial independence. The initiative has significantly strengthened financial literacy and economic empowerment within communities: an impressive 99% of participants acknowledged gaining knowledge and awareness about government financial schemes, enabling them to access vital resources. The program has also played a crucial role in promoting effective financial management, with 90% of participants affirming that they now understand budgeting practices better, allowing them to allocate finances more effectively for essentials such as groceries, housing, borrowings and medical needs. Additionally, 89% confirmed increased awareness of digital payment methods, enhancing financial inclusion. With 88% recognizing improved household savings and expanded livelihood opportunities for women, the program has fostered long-term economic security. Furthermore, 82% of participants reported greater confidence in making financial decisions for their families, demonstrating the program’s success in building financial resilience and self-reliance at the community level. Please refer to the following link to access the detailed impact assessment report: https://www.ltfinance.com/csr 2. Digital Sakhi - Odisha: The Digital Sakhi program in Odisha has played a crucial role in enhancing financial independence and decision-making among women. Among those who started saving, 83% reported earning interest, demonstrating the program’s impact on promoting financial security. Additionally, 76% of Digital Sakhis confirmed that their monthly income increased, reflecting the program’s effectiveness in fostering economic empowerment. Before joining the Digital Sakhi program, a significant 89% of participants were housewives, after the initiative 38% Sakhis saw an increase in their income. Beyond financial gains, 60% affirmed that the training helped them make better household decisions, showcasing the program’s role in strengthening women’s decision making capability. By equipping them with financial literacy, digital skills, and entrepreneurial knowledge, the Digital Sakhi program in Odisha is continuing to drive long-term socio-economic transformation for women and their communities. The WE has been instrumental in driving business growth and financial empowerment in Odisha. Post-training, 91% of participants reported an increase in their business income, while 88% saw a rise in customer base and sales, highlighting the program’s effectiveness in strengthening entrepreneurial skills. The training, which included 3 (three) offline sessions for 73% of participants, provided hands-on learning opportunities. Financial access also improved, with 62% of WE who took loans post-program saving an average of r 8,000 on repayments, reflecting better loan terms and financial management. Additionally, WE came at the forefront of financial decision making, with 100% of them taking household decisions, compared to only 13% at baseline. The WE initiative significantly empowered women by enhancing their financial knowledge, business acumen, and access to economic opportunities. The Digital Sakhi program has significantly improved financial literacy and economic awareness among community members. A remarkable 82% agreed that the program provided valuable knowledge on government financial schemes, while 69% acknowledged gaining a better understanding of financial management and budgeting practices, enabling them to plan for essentials like groceries, house loans, travel, and medical expenses. The program has also fostered a culture of saving, with the percentage of community members saving every month increasing from 4% at baseline to 81% at endline: a remarkable 77% rise. Also, awareness of insurance policies saw a dramatic shift from 0% to 76%, ensuring families are better protected financially. Additionally, social security scheme awareness grew by 65% (from 21% to 86%), and knowledge about digital payments improved by 57% (from 26% to 83%). These outcomes highlight the program’s transformative impact in empowering Odisha’s communities with financial knowledge, fostering long-term economic resilience, and strengthening financial inclusion.
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Integrated Annual Report 2024-25404 Please refer to the following link to access the detailed impact assessment report; https://www.ltfinance.com/csr. 5) a) Average net profit of the Company as per sub-section (5) of Section 135: r 10,26,94,13,873.83 b) Two percent of average net profit of the Company as per sub-section (5) of Section 135: r 20,53,88,277.48 c) Surplus arising out of the CSR projects or programmes or activities of the previous financial years: Nil d) Amount required to be set-off for the financial year, if any: r 18,02,63,406.67 e) Total CSR obligation for the financial year [(b)+(c)-(d)]: r 2,51,24,870.81 6) a) Amount spent on CSR Projects (both Ongoing Project and other than Ongoing Project): r 27,09,25,906.00 b) Amount spent in Administrative Overheads: r 1,35,46,295.30 c) Amount spent on Impact Assessment, if applicable: r 23,75,033.70 d) Total amount spent for the Financial Year [(a)+(b)+(c)]: r 28,68,47,235.00 e) CSR amount spent or unspent for the financial year: Total amount spent for the financial year (in r) Amount Unspent (in r) Total amount transferred to Unspent CSR Account as per sub-section (6) of Section 135 Amount transferred to any fund specified under Schedule VII as per second proviso to sub-section (5) of Section 135 Amount Date of transfer Name of the Fund Amount Date of transfer 28,68,47,235.00 Nil – – Nil – f) Excess amount for set-off, if any: Sr. No. Particular Amount (in r) i. Two percent of average net profit of the Company as per sub-section (5) of Section 135* 2,51,24,870.81 ii. Total amount spent for the financial year 28,68,47,235.00 iii. Excess amount spent for the financial year [(ii)-(i)] 26,17,22,364.19 iv. Surplus arising out of the CSR projects or programmes or activities of the previous financial years, if any – v. Amount available for set-off in succeeding financial years [(iii)-(iv)] 26,17,22,364.19 * The amount represents the total CSR obligation for FY25 post taking into consideration the set-off of R 18,02,63,406.67 for FY24.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 405 7) Details of Unspent Corporate Social Responsibility amount for the preceding three financial years of the Company: Sr. No. Preceding financial year Amount transferred to Unspent CSR Account under sub- section (6) of Section 135 (in `) Balance Amount in Unspent Account under sub-section (6) of Section 135 (in `) Amount spent in the Financial Year (in `) Amount transferred to any fund specified under schedule VII as per sub-section (5) of Section 135, if any Amount remaining to be spent in succeeding financial years (in `) Deficiency, if any Amount (in `) Date of transfer 1 FY24 Nil Nil Nil Nil Nil Nil Nil 2 FY23 Nil Nil Nil Nil Nil Nil Nil 3 FY22 Nil Nil Nil Nil Nil Nil Nil TOTAL Nil Nil Nil Nil Nil Nil Nil 8) Whether any capital assets have been created or acquired through Corporate Social Responsibility amount spent in the Financial Year: Yes No 9) Specify the reason(s), if the Company has failed to spend two per cent of the average net profit as per sub-section (5) of Section 135: Not Applicable Rajani R. Gupte Chairperson CSR and ESG Committee DIN: 03172965 Sudipta Roy Managing Director and Chief Executive Officer DIN: 08069653 Place: Mumbai Date: April 25, 2025
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Integrated Annual Report 2024-25406 A. Philosophy on Corporate Governance At L&T Finance (“LTF”), we are committed to uphold the best-in-class corporate practices and principles of corporate governance to ensure transparency, integrity and accountability in every facet of our operations and in all spheres of our activities. At the core of our philosophy lie the fundamental principles of pride, integrity, discipline, and ambition, which serve as the guiding light for our operations. The Company always adopts best business / governance practices which is a reflection of a well governed company through continuous review and benchmarking itself. The Company believes that effective leadership, robust corporate governance practices and a rich legacy of values form the hallmark of our corporate governance philosophy. Our culture, business practices, disclosure policies and relationship with our stakeholders demonstrates these values. Our dedication to excellence, accountability and technology driven sustainable growth, ensures we navigate the ever-changing landscape efficiently and effectively. The Board of Directors (“Board”) through its supervisory role and oversight ensures that that the appropriate processes and controls are in place, to support our operations and protect our stakeholders’ interest. The Board fully supports and endorses the corporate governance practices as envisaged in the Securities and Exchange Corporate Governance Report [Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015] Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”). Key elements of Company’s Corporate Governance • Proactive adherence to laws. • Benchmarking and adopting best practices among banks, peers and other leading organizations. • Board comprises of Directors from diverse backgrounds and substantial experience, who are able to provide appropriate guidance to the management of the Company. • Separate meeting of independent directors without presence of non-independent directors or Management. • Confidential Board evaluation process where each Board member evaluates the performance of every Director, Committees of the Board, the Chairman of the Board and the Board as a whole. • Complete and detailed information provided to Board members in advance to enable them to evaluate matters carefully for meaningful discussions. The Company has complied with all the requirements under the SEBI Listing Regulations. A report on compliance with the SEBI Listing Regulations is given subsequently in this report. Corporate Governance Structure Board of Directors Shareholders Oversight- Board Committees Special Committee of the Board for Monitoring and Follow-up of cases of Frauds Risk Management Committee Corporate Social Responsibility and ESG Committee Nomination and Remuneration Committee Audit Committee Review Committee Asset Liability Management Committee Stakeholders’ Relationship and Customer Protection Committee IT Strategy Committee Management Managing Director & Chief Executive Officer Group Executive Committee 3 Internal Working Committees
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Corporate Overview Statutory Reports Financial Statements L&T Finance 407 B. Board of Directors The Board of Directors (‘Board”) play a crucial role in providing strategic guidance and help build governance structure to drive the overall success and growth of the Company. Comprising a diverse group of highly experienced professionals, the Board brings together a wealth of knowledge, expertise, and industry insights including on emerging topics like sustainability and AI. Our esteemed Board members are selected based on their extensive backgrounds in various sectors, skills possessed and expertise including their ability to provide valuable perspectives on various matters which have a bearing on the Company. The selection process of a Director is basis a pre- determined Board approved criteria. The following skills are inter alia taken into consideration: • Leadership qualities • Industry knowledge & experience • Financial literacy • Understanding of relevant laws • Information technology • Risk management • Policy shaping & industry advocacy • Corporate Governance A multi-layer process for appointment of a Director on the Board is undertaken, comprising the following, ensuring orderly succession planning of the Board: 1. Initiation of the process for identification of the proposed candidate much in advance (generally a year) 2. Identification and finalisation of key areas of expertise warranted on the Board. 3. Analysis of the industry and if required, empanelment of experts to help in the identification process. 4. Undertaking due diligence: a. No conflict of interest checks b. Reviewing of the profile and experience to ensure proper fitment c. Screening of existing directorships d. Scanning of information available in public domain for any negative news e. Reference checks Post the aforesaid, the shortlisted candidate(s) are referred to the NRC. The NRC thereafter evaluates the candidates across several key parameters, including age, gender, education, professional background, skills and alignment with your Company’s strategic goals and recommends the same to the Board for approval. Lastly, the Board and the Members approve the appointment. As stewards of corporate governance, the Board ensures that the Company operates with integrity, transparency, and adheres to legal and ethical standards. They oversee the formulation and implementation of effective policies, risk management strategies, and long-term strategic plans. Through their collective wisdom and experience, they provide guidance to the leadership team, offering valuable insights and oversight to steer the Company towards achieving its goals, driving innovation, and creating sustainable value for all the stakeholders. 1. Composition of Board: As on March 31, 2025, the Board consists of 7 (seven) Directors comprising 4 (four) Independent Directors (including 2 (two) women Independent Directors), 1 (one) Executive Director and 2 (two) Non-Executive Directors. Further, the Company does not have any Directors on the Board with a permanent Board seat. The Board consists of eminent personalities from diverse fields: entrepreneurs / professionals, private sector / public sector, social sector / commercial sector, banking / non-banking sector. Mr. Dinanath Dubhashi (DIN:03545900), who was re-designated as the Whole-time Director of the Company with effect from January 24, 2024 until April 30, 2024, ceased to be the Whole-time Director of the Company on account of completion of his tenure. In view of the termination of the investment agreement entered into between BC Asia Growth Investments, BC Investments VI Limited (collectively referred to as “Bain Capital”) and the Company in relation to the acquisition of shares (directly or indirectly) by Bain Capital and in accordance with the terms of the investment agreement, Mr. Pavninder Singh (DIN: 03048302) ceased to be a Director (Nominee Director) on the Board of the Company w.e.f. June 13, 2024. The Board records its deepest appreciation for contribution by Mr. Dinanath Dubhashi
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Integrated Annual Report 2024-25408 (DIN: 03545900) and Mr. Pavninder Singh (DIN: 03048302) during their tenure on the Board of the Company. The composition of Board of your Company is commensurate with the size of the Company, complexity and nature of various underlying businesses, and represents an optimal mix of professionalism, knowledge and experience and enables the Board to discharge its responsibilities and provides effective leadership to the Company. All the Independent Directors have confirmed to the Board that they meet the criteria for independence in terms of the definition of ‘Independent Director’ stipulated under Regulation 16(1)(b) of the SEBI Listing Regulations and Section 149(6) of the Act. These confirmations have been placed before the Board. None of the Directors of the Company are inter-se related to each other. 2. Board Procedure: The Board meets at regular intervals and the Board meetings (including Committee meetings) serve as a forum for Board/ Committee members to come together and deliberate on critical matters related to the organization’s strategy, operations, financial performance, governance and sustainability. These meetings of the Company are held at regular intervals, and a tentative annual calendar of the Board and Committee meetings is circulated to the Directors much in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. However, in case of a special and urgent business need, separate Board / Committee meetings are held or the approval is taken by passing resolution(s) by circulation, as permitted by law, which is noted in the subsequent meeting. The Corporate Secretarial Team is the secretariat to the Board and approaches various business / department heads in advance with regard to matters requiring the approval of the Board / Committee to enable inclusion of the same in the agenda for the Board / Committee meetings. Board members receive detailed agendas including relevant materials, such as reports, statements, and other necessary documents, well in advance of the meetings enabling them to review and prepare for discussions. During the meeting, the Board engages in structured discussions, allowing each member to share insights, ask questions, and express their viewpoints. Where it is not practicable to circulate any document in advance or if the agenda is of a confidential nature, the same is presented directly at the meeting. In special and exceptional circumstances, consideration of additional or supplementary items are taken up with the approval of the Chair and majority of Directors. Senior management is invited to the Board / Committee meeting(s) to provide additional inputs for the items pertaining to their line of business / function being discussed by the Board / Committee(s). The Board members interact with the senior management (including Chief Executives) frequently including at the Board meetings. Further, presentations are made on business operations to the Board by the respective senior management covering business strategy and updates on business, macro-economic development, IT and data analytics, marketing, CSR and initiatives under Environmental, Social and Governance (“ESG”). Additionally, presentations are made on various matters including the financial statements, fund raising program, operations related issues, customers/investors complaints and the redressal thereof, regulatory environment or any other issue which the Board is required / wants to be apprised of. The Company Secretary is responsible for preparation of the agenda and convening of the Board and Committee meetings. The Company Secretary attends all the meetings of the Board and its Committees, advises / assures the Board on compliance and governance principles and ensures appropriate recording of minutes of the meetings. With a view to leveraging technology and reducing paper consumption, the Company has adopted a web-based application for transmitting Board / Committee agenda and minutes. The Directors of the Company receive the agenda in electronic form through this application, which can be accessed only through i-Pad. The application meets the high standards of security and integrity that is required for storage and transmission of Board / Committee agenda and minutes in electronic form. The draft minutes of the proceedings of the meetings of the Board / Committee(s) are circulated to all the members of the Board or the Committee
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Corporate Overview Statutory Reports Financial Statements L&T Finance 409 for their perusal, within 15 (fifteen) days from the date of the conclusion of the meeting. Comments, if any, received from the Directors are incorporated in the minutes. The minutes are approved by the members of the Board / Committee(s) and confirmed in accordance with the regulatory requirements. 3. Meeting of Independent Directors: Section 149(8) of the Act read with Schedule IV of the Act and Regulation 25(3) of SEBI Listing Regulations require the Independent Directors of the Company to hold at least 1 (one) meeting as per regulatory requirements without the attendance of non-independent directors and members of the management. In view of the aforesaid requirements, the Independent Directors of the Company met on April 27, 2024. Necessary actions were taken in respect of the actionable points, if any, which arose during the discussions at the meeting. 4. Meetings and Attendance: During the financial year ended March 31, 2025, 5 (five) Board meetings were held on April 27, 2024, July 16, 2024, October 18, 2024, January 20, 2025 and March 11, 2025. The meetings of the Board during the year were generally held at 15th floor, Board Room, A M Naik Tower, Krishna Nagar, Powai, Mumbai - 400072 or at the registered office of the Company. The details of attendance of the members of the Board at the meetings held during the year and also the number of other Directorships and Memberships / Chairmanships of Committees held by them as on March 31, 2025 are as follows: Name of the Director Nature of Directorship Board meetings held/ conducted during the year No. of Board meetings attended Attendance at the last AGM No. of directorships in other companies(1) No. of committee memberships/ chairmanships (including the Company)(2) No. of independent directorships (including the Company)(3) Member Chairman S.N. Subrahmanyan (DIN: 02255382) C (NED) 5 5 6 – – – Sudipta Roy (DIN: 08069653) MD & CEO 5 5 1 1 – – Dinanath Dubhashi(4) (DIN: 03545900) WTD 1 1 – – – – – R. Shankar Raman (DIN: 00019798) NED 5 5 5 3 – – Thomas Mathew T. (DIN: 00130282) ID 5 5 1 3 2 1 Rajani R. Gupte (DIN: 03172965) ID 5 5 – 1 1 1 R. Seetharaman (DIN: 01846777) ID 5 5 – 2 1 1 Nishi Vasudeva (DIN: 03016991) ID 5 4 5 8 2 3 Pavninder Singh(5) (DIN: 03048302) NED / ND 1 1 – – – – – C – Chairman MD – Managing Director CEO – Chief Executive Officer WTD – Whole-time Director ND – Nominee Director NED – Non-Executive Director ID – Independent Director – Present
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Integrated Annual Report 2024-25410 Notes: (1) Excludes Directorship in foreign company and Section 8 company. (2) Memberships include Chairmanships. Only memberships of Audit Committee and Stakeholders Relationship Committee are considered. This includes memberships in deemed public company. (3) Only equity listed companies are considered. (4) Mr. Dinanath Dubhashi ceased to be Whole Time Director of the Company w.e.f. May 01, 2024. (5) Mr. Pavninder Singh ceased to be the Nominee Director of the Company w.e.f. June 13, 2024. The details pertaining to the directorships held by a Director in listed companies other than the Company as on March 31, 2025 is as follows: Name of the Director Name of the listed entity(1) Nature of Directorship S.N. Subrahmanyan Larsen & Toubro Limited Chairman and Managing Director L&T Technology Services Limited Chairman and Non-Executive Director LTIMindtree Limited Chairman and Non-Executive Director Sudipta Roy – – R. Shankar Raman Larsen & Toubro Limited Whole–time Director and Chief Financial Officer LTIMindtree Limited Non–Executive Director Thomas Mathew T. – – Rajani R. Gupte – – R. Seetharaman – – Nishi Vasudeva Crisil Limited Independent Director HCL Technologies Limited Independent Director (1) Only equity listed companies are considered. 5. Information to the Board: The Board has access to the information within the Company, which inter alia includes – • Annual revenue budgets and capital expenditure plans of the Company; • Quarterly results and results of operations of subsidiaries; • Minutes of the meetings of the Board of Directors and Committees; • Minutes of the Board meetings of subsidiaries; • Details of potential acquisitions or collaboration agreement, if any; • Material default, if any, in the financial obligations to and by the Company or substantial non-payment; • Any issue, which involves possible public liability claims of substantial nature, including any judgment or order, if any, which may have strictures on the conduct of the Company; • Developments in respect of human resources; and • Non-compliance of any regulatory, statutory nature or listing requirements and investor service such as non-payment of dividend, delay in share transfer, etc., if any.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 411 6. Post-meeting internal communication system: Any action to be taken following the deliberations at the Board/ Committee meetings are recorded, disseminated to relevant stakeholders for taking necessary steps and status of thereof is reported back to the Board/ Committee. This ensures accountability, focus and transparency. 7. Board-skills/ expertise/ competencies: For details on the Board-skills / expertise / competencies, please refer to the Corporate Governance section of the Report. 8. Performance Evaluation: The NRC has approved a policy for evaluation of the Board, its Committees and Directors and the same has been approved by the Board of the Company. The process for the aforesaid evaluation as required under the Act is given in the Board’s Report. 9. Succession Planning: To ensure the long-term sustainability and continued success of your Company, the Company has a mechanism in place for ensuring orderly succession for appointments to the Board and senior management by identification of talent and further development process, to build a pipeline of talent to meet future leadership needs. The NRC is responsible for overseeing the succession planning for the Board and senior management as per the NRC policy of the Company. For more details on approach to the succession planning and the actions on the same during the year, please refer to the Corporate Governance section of the Report. 10. Familiarization programme: Your Company has designed a familiarization program to introduce/ induct all new Independent Directors. This program plays a vital role in enabling the Board members to understand the organization, its operations, culture, governance practices and also their roles, responsibilities, and expectations, thereby facilitating their effective contribution to the Board’s work. Systems and resources are made available to the members of the Board. The Company also provides its directors with training opportunities related to its business, both during the induction process and periodically (including during Board Meetings). The Board conducts a dedicated meeting annually to discuss the strategy and budget of the Company. The Board members interact with the senior management whereby they stand to benefit from the Directors’ experience. During FY25, 100% of the Board has undergone dedicated training on ESG covering climate risks for the global financial system and Information Security on social engineering red flags. Additionally, during the year under review, in line with the significant increase in the importance of usage of AI in the lending business, an AI bootcamp was organised for the Independent Directors. For details on the number of training hours of the Board, please refer the Business Responsibility and Sustainability Report. Additionally, regular field visits i.e., visits to the branches and meeting centers, dealers and CSR projects, are generally arranged for the Directors which help them understand the businesses and the on-ground functioning. It also gives the Board an opportunity to communicate directly with the borrowers and dealers and understand the on- ground perception of the services provided by the Company and factors which differentiates its offerings from the others. The visits to the CSR projects of the Company and meeting with CSR beneficiaries help the Board understand the social impact of your Company’s CSR initiatives. For the Independent Director appointed during the year, specific one to one interaction with the members of the management team were facilitated. Additionally, a dedicated field visit was arranged to familiarize the Director with on-field operations. The details relating to the familiarization programme are available on the website of the Company at https://www.ltfinance.com/investors (click- Familiarization Programme). 11. Confirmation of Independent Directors: In the opinion of the Board, Independent Directors fulfill the conditions required for independent directors as per the provisions of the Act, the SEBI Listing Regulations and all other applicable laws and are independent of the management. C. Board Committees Board level committees are essential for effective governance and efficient decision making within a Company. Board level Committees provide a structured approach to address specific areas of operations, allowing Board Members to focus
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Integrated Annual Report 2024-25412 on other issues in more depth. By delegating certain responsibilities to Committees, the Board can leverage the expertise and specialized knowledge of Committee members, leading to better informed decisions. Establishing Board level Committees also ensures a checks and balances system within the Company, with Committees independently reviewing and evaluating key aspects of operations and decision making. Overall, Board level Committees enhance governance practices, strengthen board effectiveness, and contribute to the long-term success of the Company. The Board is regularly briefed about the deliberations at the meetings of the Committees and a summary of discussions as well as the minutes of such meetings are circulated to the Board. Further, business transacted by the Committees of the Board is placed before the Board for noting/ recommendation/ approval, as applicable. The Board has currently constituted the following Committees including pursuant to the provisions of the Act, SEBI Listing Regulations and Reserve Bank of India (“RBI”) regulations: • Audit Committee; • Nomination and Remuneration Committee; • Corporate Social Responsibility and ESG Committee; • Risk Management Committee; • IT Strategy Committee; • Stakeholders Relationship and Customer Protection Committee; • Asset Liability Management Committee; • Committee of Directors; • Special Committee of the Board for Monitoring and Follow-up of cases of Frauds; and • Review Committee. In addition to the aforesaid Committees, various internal committees/ groups are formed to help the Committees discharge their functions effectively by reviewing the relevant items before they are taken up by at the Board/ Committee meetings. 1. Audit Committee (“AC”): Terms of reference: The role of the AC includes the following: • Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible; • Recommendation for appointment, remuneration and terms of appointment of the auditors of the Company; • Approval of payment of fees to statutory auditors for any other services rendered by the statutory auditors; • Reviewing, with the management, the Annual Financial Statements and auditor’s report thereon before submission to the Board for approval, with particular reference to: a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of Section 134(3)(c) of the Act b. Changes, if any, in the accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of judgment by management d. Significant adjustments made in the financial statements arising out of audit findings e. Compliance with listing and other legal requirements relating to financial statements f. Disclosure of any related party transactions g. Qualifications in the draft audit report • Reviewing, with the management, the quarterly financial statements before submission to the Board for approval; • Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;
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Corporate Overview Statutory Reports Financial Statements L&T Finance 413 • Reviewing and monitoring the auditor’s independence and performance, and effectiveness of audit process; • Approval or any subsequent modification of transactions of the Company with related parties; • Scrutiny of inter-corporate loans and investments; • Valuation of undertakings or assets of the Company, wherever it is necessary; • Evaluation of internal financial controls and risk management systems; • Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; • Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit; • Discussion with internal auditors of any significant findings and follow up there on; • Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board; • Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; • Looking into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; • Reviewing the functioning of the Whistle Blower Mechanism / Vigil Mechanism; • Approval of appointment of Chief Financial Officer (i.e., the Whole-Time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate; • Investigating into any matter in relation to the items given above or referred to it by the Board and power to obtain professional advice from external sources and have full access to information contained in the records of the Company; • Right to call for the comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement before their submission to the Board and discuss any related issues with the internal and statutory auditors and the management of the Company; • Reviewing of the utilization of loans and / or advances from / investment by the holding company in the subsidiary exceeding R 100 crores or 10% of the asset size of the subsidiary, whichever is lower; • Considering and commenting on rationale, cost-benefits and impact of schemes involving merger, demerger, amalgamation etc., on the listed entity and its shareholders; • Conducting a periodic review of incidents of fraud cases; • With respect to fraud cases involving very senior executives of the Company (i.e. MD & CEO / Executive Director / Executives of equivalent rank), initiation of examination of the accountability and placing it before the Board; • Taking appropriate action w.r.t. cases where the auditors have highlighted possibility of fraudulent transactions in the account; • Reviewing the cases of wilful default on a regular basis and recommending steps to be taken to prevent such occurrences and their early detection; • Reviewing of information as prescribed under the SEBI Listing Regulations (as amended from time to time); and • Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. • Such other functions as may be delegated by the Board from time-to-time or prescribed under law.
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Integrated Annual Report 2024-25414 Composition as on the date of the Board’s Report: Name of the Director Designation in the Committee Nature of Directorship R. Seetharaman Chairman ID R. Shankar Raman Member NED Thomas Mathew T. Member ID Nishi Vasudeva Member ID Meetings and Attendance: The AC met 5 (five) times during the year on April 27, 2024, July 16, 2024, October 18, 2024, January 20, 2025 and March 11, 2025. The attendance of members at the meetings was as follows: Name of the Director No. of Meetings held/conducted during the tenure of the Member/year No. of Meetings attended R. Seetharaman 5 5 R. Shankar Raman 5 5 Thomas Mathew T. 5 5 Nishi Vasudeva 5 4 All the recommendations by the AC to the Board during the year have been accepted. All the members of the AC are financially literate and have accounting or related financial management expertise. The Company Secretary is the Secretary to the Committee. 2. Nomination and Remuneration Committee (“NRC”): Terms of reference: The role of the NRC includes the following: • Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and carrying out evaluation of Board / Committees / Directors; • Formulating the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees; • Recommending to the Board appointment of Chief Compliance Officer in accordance with RBI regulations; • Ensuring that: a. the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully. b. relationship of remuneration to performance is clear and meets appropriate performance benchmarks. c. remuneration to Directors, key managerial personnel and senior management personnel involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals. • Laying down the evaluation criteria for performance evaluation of Independent Directors and the Board; • Devising a policy on Board diversity; • Formulating the Employee Stock Option Scheme (“ESOS”), decide the terms and conditions, make appropriate recommendations to the Board of Directors and administering and superintending ESOS; and • Determining the remuneration payable to the senior management personnel as defined under the SEBI Listing Regulations including Chief Financial Officer and Company Secretary of the Company. • Such other functions as may be delegated by the Board from time-to-time or prescribed under law. Composition as on the date of the Board’s Report: Name of the Director Designation in the Committee Nature of Directorship Thomas Mathew T. Chairman ID R. Shankar Raman Member NED Rajani R. Gupte Member ID Meetings and Attendance: The NRC met 4 (four) times during the year on April 27, 2024, July 16, 2024, October 18, 2024, and January 20, 2025.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 415 The attendance of members at the meetings was as follows: Name of the Director No. of Meetings held/conducted during the tenure of the Member/year No. of Meetings attended Thomas Mathew T. 4 4 R. Shankar Raman 4 4 Rajani R. Gupte 4 4 Remuneration Policy: The remuneration of the Board members is based on the Company’s size, its economic and financial position, industrial trends and compensation paid by peer companies. The compensation reflects each Board member’s responsibility and performance. The Directors on the Board who are in the services of L&T Group are not paid any commission or sitting fees for attending the meetings of the Board and / or any Committee. While the Company pays remuneration to Executive Director(s) by way of salary, perquisites, retirement benefits (fixed components) and variable remuneration, the Non-Executive Directors (“NEDs”) are paid remuneration by way of commission and sitting fees. The remuneration to NEDs is based on the recommendations of the NRC and approval of the Board, subject to the limits approved by the Members, to the extent required as per regulatory requirements. None of the NEDs have any pecuniary relationship with the Company, except the sitting fees and commission as approved by the Board. As required under Schedule V of the SEBI Listing Regulations, the criteria for payment to NEDs is available on the website of the Company at https://www.ltfinance.com/investors (click-Criteria for Payment to NEDs). Further, the performance evaluation criteria for Independent Directors as required under Schedule V of the SEBI Listing Regulations is included in the Board’s Report. Details of remuneration paid to Directors for the financial year ended March 31, 2025: a) Remuneration to Executive Director(s) The details of remuneration paid to Mr. Sudipta Roy, Managing Director and Chief Executive Officer and Mr. Dinanath Dubhashi, Whole-time Director are as follows: (r in Cr) Name of the Director Salary (including Retention Bonus & Perquisites) Performance linked Incentive/ Variable Remuneration(1) (up to) Retirement Benefits Total Sudipta Roy 3.90 (1) 1.00 (1) – 4.90 Dinanath Dubhashi (3) 5.46 (2) – – 5.46 (1) Amount for retention and variable pay are provisional. Amount to be determined by the NRC, based on policy approved by the Board. (2) Includes perquisite on ESOPs exercised during the year, if any. (3) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024. Note: • Notice period for termination of appointment of Managing Director and Chief Executive Officer is 3 (three) months on either side. • No severance pay is payable on termination of appointment. • Details of options granted, if any, under Employees Stock Options Schemes are provided on the website of the Company at https://www.ltfinance.com/investors. b) Remuneration to Non-Executive Directors The Company follows a transparent process for determining the remuneration of NEDs. Their remuneration is governed by the role assumed, number of meetings of the Board and the Committees thereof attended by them, active participation in strategic decision making and inputs to executive management on matters of strategic importance. Besides these, the Board also takes into consideration the external competitive environment, track record, individual performance of such Directors and performance of the Company as well as the industry standards in determining the remuneration of NEDs including Independent Directors. In the backdrop of growing complexities and increasing regulatory requirements, the NEDs have contributed significantly and given useful feedback from time to time. The commission payable / paid in respect of NEDs for the year is mentioned below. The commission is as per the
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Integrated Annual Report 2024-25416 limits approved by the Members, subject to the limit not exceeding 1% p.a. of the net profits of the Company. In addition to the commission, during the year under review, the Company has paid sitting fees of r 60,000 per Board and Independent Directors meeting, r 50,000 per Audit Committee and Nomination and Remuneration Committee meeting and r 40,000 per meeting for other Committee meetings. The details of remuneration paid to the NEDs are as follows: (r in Lakhs) Name of the Director Sitting fees for Board Meeting/ Independent Director Meeting Sitting fees for Committee Meetings Commission(1) Total S.N. Subrahmanyan(2) – – – – R. Shankar Raman(2) – – – – Thomas Mathew T. 3.60 6.90 24.40 34.90 Nishi Vasudeva 3.00 5.20 19.80 28.00 Rajani R. Gupte 3.60 5.60 21.05 30.25 R. Seetharaman 3.60 5.30 18.75 27.65 Pavninder Singh 0.60 – 1.50 2.10 (1) Based on the guidelines formulated by the NRC and approved by Board. (2) Mr. S.N. Subrahmanyan and Mr. R. Shankar Raman are in the services of Larsen & Toubro Limited and draw remuneration from Larsen & Toubro Limited. They are not paid any commission or sitting fees separately for attending the meetings of the Board and/ or any Committee of the Company. Details of shares / convertible instruments, if any, held by the NEDs as on March 31, 2025 are as follows: Name of the Director No. of equity shares S.N. Subrahmanyan 4,987 R. Shankar Raman 30,080 Thomas Mathew T. – Rajani R. Gupte – R. Seetharaman – Nishi Vasudeva – 3. Corporate Social Responsibility (“CSR”) and ESG Committee: Terms of reference: The role of CSR and ESG Committee includes the following: • Formulation of the CSR policy indicating the activities to be undertaken by the Company as per regulatory requirements and recommending the same to the Board; • Recommending to the Board the annual action plan and the amount to be spent on CSR activities; • Monitoring the implementation of the CSR policy; • Formulation of action plan / guidelines / policies with regard to Sustainability / ESG; • Reviewing implementation of the action plan; and • Approving the sustainability report(s). Composition as on the date of the Board’s Report: Name of the Director Designation in the Committee Nature of Directorship Rajani R. Gupte Chairperson ID Sudipta Roy Member MD & CEO R. Seetharaman Member ID Dinanath Dubhashi(1) Member WTD (1) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 417 Meetings and Attendance: The Committee met once in the year on April 26, 2024 and all the members of the CSR and ESG Committee had attended the meeting. Name of the Director No. of Meetings held/conducted during the tenure of the Member/year No. of Meetings attended Rajani R. Gupte 1 1 Sudipta Roy 1 1 R. Seetharaman 1 1 Dinanath Dubhashi(1) 1 1 (1) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024. 4. Risk Management Committee (“RMC”): Terms of reference: The role of the RMC includes the following: • Formulating a detailed risk management policy including: a. A framework for identification of internal and external risks specifically faced by the Company, in particular including financial, market, operational, sectoral, sustainability (particularly, ESG related risks), information, cyber security risks or any other risk as may be determined by the Committee; b. Measures for risk mitigation including systems and processes for internal control of identified risks; and c. Business continuity plan. • Ensuring that appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company; • Monitoring and overseeing implementation of the risk management policy, including evaluating the adequacy of risk management systems; • Periodically reviewing the risk management policy, at least once a year including by considering the changing industry dynamics and evolving complexity; • Keeping the Board informed about the nature and content of its discussions, recommendations and actions to be taken; • Reviewing the appointment, removal and terms of remuneration of the Chief Risk Officer (if any); and • Such other functions as the Board may from time-to-time delegate to it or may be prescribed under law. Composition as on the date of the Board’s Report: Name of the Member Designation in the Committee Nature of Directorship Nishi Vasudeva Chairperson ID Managing Director and Chief Executive Officer Member – R. Shankar Raman Member NED Rajani R. Gupte Member ID Dinanath Dubhashi(1) Member WTD Pavninder Singh(2) Member NED / ND Chief Risk Officer Member – Chief Financial Officer Member – Company Secretary Member – (1) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024. (2) Mr. Pavninder Singh ceased to be the Nominee Director w.e.f. June 13, 2024. Meetings and Attendance: The Committee met 4 (four) times during the year on June 28, 2024, September 27, 2024, December 20, 2024 and March 24, 2025. The attendance of members at the meetings was as follows: Details of the Member No. of Meetings held/conducted during the tenure of the Member/year No. of Meetings attended Nishi Vasudeva 4 4 Managing Director and Chief Executive Officer 4 4 R. Shankar Raman 4 3 Rajani R. Gupte 4 4 Chief Risk Officer 4 3 Chief Financial Officer 4 4 Company Secretary 4 2 5. IT Strategy Committee (“ITSC”): Terms of reference: The role of ITSC includes the following:
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Integrated Annual Report 2024-25418 • Approving Information Technology (“IT”) strategy and policy documents and ensuring that the management has put an effective strategic planning process in place; • Ascertaining that management has implemented processes and practices that ensure that the IT delivers value to the business; • Ensuring IT investments represent a balance of risks and benefits and that budgets are acceptable; • Monitoring the method that management uses to determine the IT resources needed to achieve strategic goals and provide high-level direction for sourcing and use of IT resources; • Ensuring proper balance of IT investments for sustaining NBFC’s growth and becoming aware about exposure towards IT risks and controls; and • Instituting an effective governance mechanism and risk management processes for all outsourced IT operations. • Such other functions as provided under the Information Technology Policy. Composition as on the date of the Board’s Report: Name of the Member Designation in the Committee Nature of Directorship Thomas Mathew T. Chairman ID Nishi Vasudeva Member ID Managing Director and Chief Executive Officer Member – Dinanath Dubhashi(1) Member WTD Chief Information Officer (Chief Digital Officer) Member – Chief Technology Officer Member – Chief Risk Officer Member – Chief Information Security Officer Member – Chief Financial Officer Member – (1) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024. Meetings and Attendance: The Committee met 4 (four) times during the year on June 28, 2024, September 19, 2024, December 20, 2024 and March 21, 2025. The attendance of members at the meetings was as follows: Details of the Member No. of Meetings held/conducted during the tenure of the Member/year No. of Meetings attended Thomas Mathew T. 4 4 Nishi Vasudeva 4 4 Managing Director and Chief Executive Officer 4 4 Chief Information Officer (Chief Digital Officer) 4 4 Chief Technology Officer 4 4 Chief Risk Officer 4 3 Chief Information Security Officer 4 4 Chief Financial Officer 4 4 6. Stakeholders Relationship and Customer Protection Committee (“SRCPC”): Terms of reference: The role of the SRCPC includes the following: • Reviewing of cases for refusal of transfer / transmission of shares, debentures and other securities, if any; • Redressal of stakeholders and investor complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends, non-receipt of interest, etc; • Reference to statutory and regulatory authorities regarding security holders’ grievances; • Ensuring proper and timely attendance and redressal of security holders’ queries and grievances; • Reviewing of measures taken for effective exercise of voting rights by shareholders; • Reviewing of adherence to the service standards adopted by the Company in respect of various services being rendered by the Registrar & Share Transfer Agent; • Reviewing of the various measures and initiatives taken by the Company for reducing the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants / annual reports / statutory notices by the shareholders of the Company; • Review of activities of Internal Ombudsman;
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Corporate Overview Statutory Reports Financial Statements L&T Finance 419 • Review of cases rejected by Internal Ombudsman; • Approving the standard operating procedure for handling customer service and customer protection; • Determining the structure of emoluments, facilities and benefits for the Internal Ombudsman / Deputy Internal Ombudsman; and • Such other functions as may be delegated by the Board from time-to-time or prescribed under law. Composition as on the date of the Board’s Report: Name of the Director Designation in the Committee Nature of Directorship Rajani R. Gupte Chairperson ID Sudipta Roy Member MD & CEO R. Seetharaman Member ID Dinanath Dubhashi(1) Member WTD (1) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024. Meetings and Attendance: Name of the Director No. of Meetings held/conducted during the tenure of the Member/ year No. of Meetings attended Rajani R. Gupte 4 4 Sudipta Roy 4 4 R. Seetharaman 4 4 Dinanath Dubhashi(1) 1 1 (1) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024. Details of shareholders requests/complaints: The Company resolves investor grievances expeditiously and to the satisfaction of investors. The Company / its Registrar and Share Transfer Agents received the following complaints from SEBI / Stock Exchanges, which were resolved within the time frame laid down by SEBI: Particulars Opening Received Resolved Pending Complaints: SEBI/Stock Exchanges(1) 0 17 17 0 Others 0 5 5 0 (1) SEBI (through SCORES portal)-17 , Stock Exchange-0 The Board has delegated the powers to approve transfer / transmissions of physical shares and to remat shares to a Share Transfer Committee comprising of 3 (three) senior executives i.e. Mr. Sachinn Joshi (Chief Financial Officer), Mr. Raju Dodti (Chief Operating Officer) and Ms. Apurva Rathod (Company Secretary). Ms. Apurva Rathod, Company Secretary of the Company, is the Compliance Officer / Investor Relations Officer. 7. Asset Liability Management Committee (“ALCO”) Terms of reference: The role of the ALCO includes the following: • Monitoring market risk management systems, compliance with the asset liability management policy and prudent gaps and tolerance limits and reporting systems set out by the Board of Directors and ensuring adherence to the RBI guidelines issued in this behalf from time to time; • Monitoring the business strategy of the Company (on the assets and liabilities sides) in line with the Company’s budget and decided risk management objectives; • Reviewing the effects of various possible changes in the market conditions related to the balance sheet and recommending the action needed to adhere to the Company’s internal limits; and • Balance sheet planning from risk-return perspective including the strategic management of interest rate and liquidity risks. • Such other functions as provided under the Asset Liability Management (ALM) Policy. Composition as on the date of the Board’s Report: Name of the Member Designation in the Committee Nature of Directorship Managing Director and Chief Executive Officer Chairman – Dinanath Dubhashi(1) Member – R. Govindan Member Representative of L&T Chief Financial Officer Member – Chief Risk Officer Member – Chief Economist Member – Chief Executive of respective business Member – Treasurer Member – (1) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024.
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Integrated Annual Report 2024-25420 Meetings and Attendance: The Committee met 12 (twelve) times during the year on April 25, 2024, May 23, 2024, June 27, 2024, July 30, 2024, August 22, 2024, September 20, 2024, October 24, 2024, November 27, 2024, December 23, 2024, January 23, 2025, February 24, 2025 and March 21, 2025. 8. Committee of Directors (“COD”) Terms of reference: The COD of the Company was constituted to facilitate the operational decisions within the broad framework laid down by the Board such as day to day operational decisions of the Company in terms of borrowing power, additional investment in subsidiaries, etc. Composition as on the date of the Board’s Report: Name of the Director Designation in the Committee Nature of Directorship S.N. Subrahmanyan Member NED R. Shankar Raman Member NED Sudipta Roy Member MD & CEO Dinanath Dubhashi(1) Member WTD (1) Mr. Dinanath Dubhashi ceased to be the Whole-time Director w.e.f. May 1, 2024. Meetings and Attendance: The Committee met once in the year on February 7, 2025 and all the members, of the Committee of Directors had attended the meeting. 9. Special Committee of the Board for Monitoring and Follow-up of cases of Frauds (“SCBMF”) Reserve Bank of India (“RBI”), pursuant to Master Directions on Fraud Risk Management in Non- Banking Financial Companies (“NBFCs”) (including Housing Finance Companies) having reference no. RBI/DOS/2024-25/120 DOS.CO.FMG.SEC. No.7/ 23.04.001/2024-25 dated July 15, 2024 (“Master Directions”) had directed NBFCs to constitute a Special Committee of the Board for Monitoring and Follow-up of cases of Frauds (“SCBMF”). Consequently, the Board of Directors at its meeting held on October 18, 2024 had approved the constitution of SCBMF in accordance with the Master Directions. Terms of reference: The role of the SCBMF includes the following: • Overseeing the effectiveness of the fraud risk management in the Company; • Reviewing and monitoring cases of frauds, including root cause analysis, and suggesting mitigating measures for strengthening the internal controls, risk management framework and minimising the incidence of frauds; • Overseeing effectiveness of framework for Early Warning Signals; and • Such other functions as the Board may from time-to-time delegate to it or as may be prescribed under law. Composition as on the date of the Board’s Report: Name of the Director Designation in the Committee Nature of Directorship R. Seetharaman Chairman ID Managing Director and Chief Executive Officer Member – Thomas Mathew T. Member ID Meetings and Attendance: The Committee met once in the year on January 17, 2025. Name of the Director No. of Meetings held/conducted during the tenure of the Member/year No. of Meetings attended R. Seetharaman 1 1 Managing Director and Chief Executive Officer 1 1 Thomas Mathew T. 1 1 10. Review Committee (“RC”): RBI vide its Master Direction on Treatment of Wilful Defaulters and Large Defaulters having reference no. RBI/DoR/2024-25/122DoR.FIN.REC. No.31/20.16.003/ 2024-25 dated July 30, 2024 had directed the NBFCs to constitute a review committee, for the purpose of reviewing the proposal of the Identification Committee (an internal committee constituted under the Policy on Treatment of Wilful Defaulters and Large Defaulters and Reporting Framework), for classification as a wilful defaulter. Consequently, the Board of directors in their meeting held on October 18, 2024 had approved
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Corporate Overview Statutory Reports Financial Statements L&T Finance 421 the constitution of Review Committee in accordance with the aforesaid master directions issued by RBI. Terms of reference: The role of the RC includes the following: • Reviewing the proposals made by the Identification Committee for the classification of wilful defaulters; • Providing opportunity for a personal hearing to such wilful defaulters; • Assessing the facts, materials on record, review submissions and written representations made by the borrower, etc. and to pass reasoned order/decisions for cases reviewed by the Committee; and • Such other functions as the Board may from time-to-time delegate to it or as may be prescribed under law. Composition as on the date of the Board’s Report: Name of the Director Designation in the Committee Nature of Directorship Managing Director and Chief Executive Officer Chairman – Thomas Mathew T. Member ID R. Seetharaman Member ID Meetings and Attendance: The Committee met once in the year on January 17, 2025. Name of the Director No. of Meetings held/conducted during the tenure of the Member/ year No. of Meetings attended Managing Director and Chief Executive Officer 1 1 Thomas Mathew T. 1 1 R. Seetharaman 1 1 D. Particulars of Senior Management: The details of Senior Management Personnel (“SMP”) as per SEBI Listing Regulations as on March 31, 2025 and the changes during the year are as follows: Name Designation Sachinn Joshi Chief Financial Officer Apurva Rathod Company Secretary and Chief Sustainability Officer Raju Dodti Chief Operating Officer Santosh Parab General Counsel Abhishek Sharma Chief Executive-SME Finance Sonia Krishnankutty Chief Executive-Rural Business Finance Asheesh Goel Chief Executive Officer - Farmer Finance Kavita Jagtiani(1) Chief Marketing Officer Ramesh Aithal(1) Chief Digital Officer Jinesh Shah(2) Chief Executive – Urban Secured Assets & 3rd Party Products Debarag Banerjee(1) Chief Data and AI Officer Nilesh Dange(1) Chief Human Resource Officer Sanjay Garyali(3) Chief Executive - Urban Finance (1) Appointed as a SMP of the Company w.e.f. April 27, 2024 (2) Appointed as a SMP of the Company w.e.f. February 05, 2025. (3) Ceased as a SMP w.e.f. March 12, 2025 pursuant to resignation from the services of the Company. E. Directors on Boards of Material Subsidiaries There is no material subsidiary of the Company as on March 31, 2025. F. Other Information Training of Directors: All Directors of the Company are aware of and are also updated as and when required, of their roles, responsibilities and liabilities. Information to Directors: The Directors have access to the information within the Company, which inter alia, includes items as mentioned in point no. B5 of the Corporate Governance Report. Presentations are made regularly to the Board and its Committees, where Directors get an opportunity to interact with the management. Independent Directors have the freedom to interact with the Company’s management. Interactions happen during Board / Committee meetings, when senior management personnel make presentations about the performance of the Company / business to the Board and even outside the meetings. Statutory Auditors: Mr. Vikas Kumar, Partner of M/s T R Chadha & Co. LLP and Mr. P .S. Kumar, Partner of M/s Brahmayya & Co., Statutory Auditors of the Company have signed the Audit Report for FY25.
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Integrated Annual Report 2024-25422 Code of Conduct: The Company has laid down a Code of Conduct for all the Board members including Independent Directors and SMP . The Code of Conduct is available on the website of the Company at https://www.ltfinance.com/investors (click-Code of Conduct). The declaration of Managing Director and Chief Executive Officer is given below: To the Members of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) Sub: Compliance with Code of Conduct I hereby declare that all the Board members and senior management personnel have affirmed compliance with the Code of Conduct of the Company as adopted by the Board of Directors. Sudipta Roy Managing Director and Chief Executive Officer Date: April 25, 2025 Place: Mumbai Vigil Mechanism Framework/ Whistle Blower Mechanism: The Company has formulated a vigil mechanism framework for Directors, employees and service providers (agency, vendor, contractor or any outsourced partner) (“collectively known as stakeholders”) to report their concerns. The objective of the framework is to establish a redressal forum, which addresses all concerns raised on questionable practices and through which the stakeholders can raise actual or suspected violations. The Vigil Mechanism Policy empowers all levels of employees including top management and service providers to raise voice against actual / suspected violations. The implementation of the framework is monitored through the whistle-blower Investigation Committee which meets on a quarterly basis and all cases are discussed in detail before it is presented to the AC. It addresses all concerns raised on questionable practices. The framework ensures protection to the whistle-blower to avoid any sort of unfair or prejudicial employment practices. The whistle-blower Investigation Committee and management maintain the anonymity of the whistle blower at all times. The details of establishment of such mechanism have been disclosed on the website of the Company at https://www.ltfinance.com/investors. As on March 31, 2025, no complaint has been received by the Company from any Directors or employees of the Company with respect to any wrong doings that may have an adverse impact on Company’s image or financials of the Company. During the year, no person has been declined access to the Audit Committee, wherever desired. General Body Meetings: The details of AGM of the Company for the previous 3 (three) years are as under: Year Date Time Venue/Mode of conducting the meeting 2021-22 July 11, 2022 3:30 P .M. Through electronic mode video conferencing (‘VC’) / other audio-visual means (‘OAVM’). The deemed venue of the AGM was the Registered Office of the Company. 2022-23 July 28, 2023 4:00 P .M. Through electronic mode video conferencing (‘VC’) / other audio-visual means (‘OAVM’). The deemed venue of the AGM was the Registered Office of the Company. 2023-24 June 25, 2024 10:00 A.M. Through electronic mode video conferencing (‘VC’) / other audio-visual means (‘OAVM’). The deemed venue of the AGM was the Registered Office of the Company. Usually, the AGM of the Company is held within four months from the end of the financial year. The following special resolutions were passed by the shareholders during the past 3 (three) Annual General Meetings: Year Date Resolution 2021-22 July 11, 2022 Sale of undertaking under Section 180(1)(a) of the Companies Act, 2013 2022-23 July 28, 2023 Re-appointment of Dr. Rajani R. Gupte (DIN: 03172965) as an Independent director of the Company; Amendment to the object clause of the memorandum of association of the Company; Alteration of articles of association of the Company. 2023-24 June 25, 2024 –
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Corporate Overview Statutory Reports Financial Statements L&T Finance 423 Postal Ballot: The Company had not passed any special resolution through postal ballot during FY25. Further, as of date of this report, there is no proposal which is envisaged to be passed through postal ballot. Further, if a resolution is passed by way of postal ballot, the Company will follow the process as per regulatory requirements. Other Disclosures: • During the year, there were no transactions of material nature with the Directors, management, their relatives or the subsidiaries, which had potential conflict with the interests of the Company. • Details of all related party transactions form a part of the financial statements as required under Ind AS 24 and the same forms part of the Integrated Annual Report. • The Company has followed all relevant Accounting Standards notified by the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time while preparing the Financial Statements. • There were no instances of non-compliance by the Company, penalties, strictures imposed on the Company by stock exchange(s) or the Board or any statutory authority, on any matter related to capital markets, during the last 3 (three) years. However, RBI by an order dated October 17, 2023, had imposed a monetary penalty of R 2.50 crores on erstwhile L&T Finance Limited, which has been merged with the Company effective December 4, 2023, for non-compliance with certain provisions of the Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016. The said penalty was paid on November 02, 2023. The Company has already taken corrective actions and strengthened various processes and controls in relation to the deficiencies observed and it has no material impact on financial, operation or other activities of the Company. • As on March 31, 2025 the Company has complied with the Corporate Governance requirements specified in Regulations 17 to 27 and Regulation 46(2) and other applicable provisions of the SEBI Listing Regulations. • The web link with respect to the policy for determining material subsidiaries and policy on dealing with related party transactions are mentioned in the Board’s Report. • The Company has also substantially complied with the discretionary requirements stipulated under Regulation 27 of the SEBI Listing Regulations. • As on March 31, 2025, there were no funds unutilized requiring disclosure as specified under Regulation 32(7A) of the SEBI Listing Regulations. • M/s Alwyn Jay & Co., Practicing Company Secretary has certified that none of the Directors of the Company have been debarred or disqualified from being appointed or continuing as a Director of the Company by SEBI or Ministry of Corporate Affairs or any other statutory authority. The said certificate forms part of this report. • During FY25, total consolidated fees of r 205 lakhs was paid to the Statutory Auditors {i.e., M/s T R Chadha & Co. LLP and M/s Brahmayya & Co} for all the services rendered to the Company. No services were rendered by the Statutory Auditors to the subsidiaries of the Company. • Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Sr. No. Particulars Details 1. Number of complaints received during the financial year 10 2. Number of complaints disposed of during the financial year 9 3. Number of complaints pending as on end of the financial year* 1 * The complaint has been resolved as on the date of the report. There was one compliant of sexual harassment of women at workplace received during FY24. • The Board of Directors confirm that during the year, it has accepted all mandatory recommendations received from its committees. • For disclosure pertaining to credit rating, please refer the Board’s Report. • The details pertaining to loans and advances in the nature of loans to firms/companies in which directors are interested by name and amount are given in the notes to the Financial Statements, as applicable. • The Company does not have any material subsidiary as on March 31, 2025. Hence, the details of material subsidiaries of the listed entity are not applicable. • During FY25, on account of termination of the investment agreement with BC Investments VI Limited, BC Asia Growth Investments (“Collectively known as Bain Capital”) and the Company in relation to the acquisition of shares (directly or indirectly) by Bain Capital and the rights of Bain Capital in the Company w.e.f. June 13, 2024, the disclosure in terms of Regulation 30A of SEBI Listing Regulations is not applicable.
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Integrated Annual Report 2024-25424 Means of Communication: • Quarterly Results are communicated through newspaper advertisements in prominent national and regional dailies like Financial Express and Navshakti and through investor calls / meets. • The financial results, official news releases and investor presentations are also displayed on the website of the Company at https://www.ltfinance.com/investors. • The Integrated Annual Report is circulated to all the Members, Statutory Auditors, Secretarial Auditor, Directors and such other persons who are entitled to receive the same. • Management Discussion and Analysis section forms a part of the Integrated Annual Report and is sent to all stakeholders as stated above. AGM through electronic mode: The Company will provide two-way video conferencing facility to the Members for participating in the Seventeenth AGM. For more details, please refer the Notice of the Seventeenth AGM, which is placed on the website of the Company https://www.ltfinance. com/investors and on the website of stock exchanges. General Shareholders’ Information: Annual General Meeting Tuesday, June 03, 2025 at 10:30 a.m. (IST) through video conferencing / other audio- visual means (deemed venue - Registered Office of the Company) Financial Year April 1, 2024 to March 31, 2025 Record Date for Dividend May 27, 2025 Dividend Payment Date The dividend of r 2.75 per equity share of face value of r10 each, if approved by the Members at the ensuing AGM, will be credited / dispatched on or before July 03, 2025. Listing on stock exchanges (equity shares) 1. BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001. 2. National Stock Exchange of India Limited, Exchange Plaza, Plot No. C-1, Block G, Bandra - Kurla Complex, Bandra (East), Mumbai - 400 051. The Company has paid the listing fees to the stock exchanges for FY25. Stock Code (NCDs) As on March 31, 2025, the Company has 124 active ISINs listed on Stock Exchanges. CIN L67120MH2008PLC181833 Debenture Trustee The Debenture Trustee of the Company are: Catalyst Trusteeship Limited 901, 9th floor, Tower B, Peninsula Business Park, Senapati Bapat Marg, Lower Parel (W), Mumbai – 400013, Maharashtra. Tel: +91 (022) 4922 0555 Fax: +91 (022) 4922 0505 E-mail: ComplianceCTL-Mumbai@ ctltrustee.com Website: https://www.catalysttrustee.com IDBI Trusteeship Services Limited Ground Floor, Universal Insurance Building, Sir Phirozshah Mehta Rd, Fort, Mumbai, Maharashtra, 400001. Tel: +91 022 4080 7000 Fax: +91 022 66311776 E-mail: itsl@idbitrustee.com Website: https://www.idbitrustee.com Beacon Trusteeship Limited 5W, 5th Floor, The Metropolitan, Bandra Kurla Complex, Bandra (East), Mumbai, Maharashtra, 400051. Fax: Not Available E-mail: Compliance@beacontrustee.co.in Website: https://beacontrustee.co.in/ In case the securities are suspended from trading, the Board’s Report shall explain the reason thereof Not applicable Registrar and Share Transfer Agent MUFG Intime India Private Limited (formerly known as Link Intime India Private Limited) C-101, 247 Park, L. B. S. Marg, Vikhroli (West), Mumbai 400083, Maharashtra, India. Tel: +91 810 811 6767 Fax: +91 22 4918 6060 E-mail: rnt.helpdesk@in.mpms.mufg.com; Toll Free: 1800 1020 878
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Corporate Overview Statutory Reports Financial Statements L&T Finance 425 Share Transfer System The Board has delegated the authority for approving transfer, transmission etc. of the Company’s securities to the Share Transfer Committee. As per SEBI Listing Regulations, transmission or transposition of securities Distribution of Shareholding as on March 31, 2025: Category (shares) Shareholders Shareholding Number % Number % Up to 500 7,70,323 88.80 7,98,95,289 3.20 501-1000 50,522 5.82 3,82,73,563 1.53 1,001-2,000 26,035 3.00 3,78,73,857 1.52 2,001-3,000 7,743 0.89 1,95,35,491 0.78 3,001-4,000 3,619 0.42 1,28,39,564 0.51 4,001-5,000 2,547 0.29 1,18,43,794 0.47 5,001-10,000 3,798 0.44 2,73,57,738 1.10 10,001 and above 2,917 0.34 2,26,72,48,805 90.88 Total 8,67,504 100.00 2,49,48,68,101 100.00 Categories of the Shareholders as on March 31, 2025: Category No. of shares % Promoters 1,65,25,30,125 66.24 Insurance Companies, Banks & NBFCs 15,42,40,711 6.18 Foreign Portfolio Investors 13,66,21,749 5.48 Mutual Funds & Alternate Investment Funds 17,72,11,123 7.10 Bodies Corporate 6,12,29,673 2.45 Directors & Relatives 1,94,685 0.01 Resident Individuals & Others 30,06,96,200 12.05 Non-Resident Indians 1,21,43,835 0.49 Total 2,49,48,68,101 100.00 held in physical form can be effected only in dematerialized form. Therefore, Members holding shares in physical form are requested to take necessary action to dematerialize the holdings. 66.24% 6.18% 5.48% 7.10% 2.45% 0.01% 12.05% 0.49% Promoters Insurance Cos., Banks & NBFCs FPI Mutual Funds & AIF Bodies Corporate Directors & Relatives Resident Individuals & Others Non Resident Indians
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Integrated Annual Report 2024-25426 Dematerialisation of Shares: The Company’s shares are required to be compulsorily traded on the stock exchanges in dematerialized form. The number of shares held in dematerialized and physical form are as under: Particulars No. of shares % National Securities Depository Limited (“NSDL”) 2,29,96,66,146 92.18 Central Depository Services (India) Limited (“CDSL”) 19,51,95,816 7.82 Physical 6,139 0.00 TOTAL 2,49,48,68,101 100.00 Dematerialization of shares and liquidity As on March 31, 2025 almost the entire equity share capital was held in the dematerialized form with NSDL and CDSL. Only 6,139 shares were held in physical form. Outstanding GDRs/ ADRs/ warrants or any convertible instruments, conversion date and likely impact on equity The Company does not have any outstanding GDRs/ ADRs/ warrants or convertible instruments as on March 31, 2025. Commodity price risk or foreign exchange risk and hedging activities Commodity price risk: Not applicable During the year, the Company has fully hedged its foreign currency risk related to External Commercial Borrowings by entering into forward contracts using cross currency swaps. Plant locations The Company does not have any plant location being a Non-Banking Financial Company. As on March 31, 2025, the Company had 2,297 total branches (including Head Office). Address for correspondence MUFG Intime India Private Limited (formerly known as Link Intime India Private Limited) C 101, 247 Park, L. B. S. Marg, Vikhroli (West), Mumbai - 400083, Maharashtra, India. Tel: +91 810 811 6767 Fax: +91 22 4918 6060 E-mail: rnt.helpdesk@in.mpms.mufg.com Toll Free: 1800 1020 878 Name and address of the Compliance Officer Ms. Apurva Rathod, Company Secretary and Compliance Officer L&T Finance Limited (formerly known as L&T Finance Holdings Limited) Brindavan, Plot No. 177, C.S.T Road, Kalina, Santacruz (East), Mumbai - 400 098, Maharashtra, India. Phone: +91 22 6212 5000 Fax: +91 22 6212 5553 E-mail: igrc@ltfs.com Unclaimed shares lying in the Suspense Account: In terms of Regulation 34 and Schedule V of the SEBI Listing Regulations, the following are the details in respect of equity shares lying in the suspense account which were issued in dematerialized form: Sr. No. Particulars No. of shareholders No. of equity shares outstanding (i) Aggregate number of shareholders and the outstanding shares in the suspense account lying at the beginning of the year, i.e., April 1, 2024. 6 689 (ii) Number of shareholders who approached the Company for transfer of shares from suspense account during the year 2024-25. 6(1) 689(1) (iii) Number of shareholders to whom shares were transferred from suspense account during the year 2024-25. 6(1) 689(1) (iv) Aggregate number of shareholders and the outstanding shares in the suspense account lying at the end of the year i.e., March 31, 2025. 0 0 (1) Shares transferred to IEPF
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Corporate Overview Statutory Reports Financial Statements L&T Finance 427 Transfer of amounts / shares to Investor Education and Protection Fund (“IEPF”): Pursuant to the provisions of Sections 124 and 125 of the Act read with the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016, dividend / interest / refund of applications which remains unclaimed / unpaid for a period of 7 years is required to be transferred to IEPF. Further, the IEPF Rules mandate the companies to transfer all shares on which dividend remains unclaimed / unpaid for a period of 7 consecutive years to the demat account of the IEPF Authority. During the year under review, the Company has transferred to IEPF a sum of r 13,64,458.40 being the amount towards unpaid / unclaimed dividend on the equity shares of the Company. The unclaimed / unpaid dividend amount transferred is out of the dividend declared in FY18. Further, 50,969 shares in respect of which the dividend was unpaid / unclaimed for a period of 7 consecutive years was also transferred to IEPF on October 26, 2024. In FY26, the amount which is unpaid / unclaimed for a period exceeding 7 years is due to be transferred to IEPF by September 27, 2025. Subsequently, the shares in respect of which dividend is unpaid / unclaimed for a period of 7 consecutive years will also be transferred to IEPF. The details of unpaid and unclaimed amounts lying with the Company as on June 25, 2024 (date of last AGM) are available on the website of the Company at https://www.ltfinance.com/investors (click-Details of Unpaid and Unclaimed Dividend) and Ministry of Corporate Affairs at https://www.iepf.gov.in. The Company requests the Members to claim the unclaimed dividend within the prescribed period. The Members can contact MUFG Intime India Private Limited (formerly known as Link Intime India Private Limited), the Registrar and Share Transfer Agents of the Company for claiming the unclaimed amount standing to the credit in their account. The Members / claimants whose shares or unclaimed dividends get transferred to IEPF may claim the shares or apply for refund from the IEPF authority by following the refund procedure as detailed on the website of IEPF authority at https://www.iepf.gov.in/IEPF/ refund.html. Securities Dealing Code: The Company has framed the Securities Dealing Code (“Code”) in line with the requirements of SEBI (Prohibition of Insider Trading) Regulations, 2015. The objective of the Code is to prevent purchase and / or sale of shares of the Company by an insider on the basis of unpublished price sensitive information. Under this Code, Designated Persons are prohibited from dealing in the shares of the Company during the closure of Trading Window. They are required to obtain compliance approval when trading in securities beyond a specified limit. They are prohibited from executing a contra trade for a period of 6 (six) months and from taking positions in the derivatives segment. They are also required to make relevant periodic disclosures as defined in the Code. Ms. Kavita Shetty is the Chief Compliance Officer for monitoring compliances with this Code. Ms. Apurva Rathod, Company Secretary has been designated as the Chief Investor Relations Officer under the Code to deal with dissemination of information and disclosure of unpublished price sensitive information. Reconciliation of Share Capital Audit: The Board of Directors of the Company at its meeting held on April 27, 2024 had appointed M/s Alwyn Jay & Co., Practicing Company Secretary as the Secretarial Auditor of the Company for FY25. As stipulated by SEBI, a Practicing Company Secretary carries out Reconciliation of Share Capital Audit to reconcile the total admitted capital with NSDL and CDSL and the total issued and listed capital. This audit is carried out every quarter and the report thereon is submitted to the stock exchanges. The audit confirms that the total listed and paid-up capital is in agreement with the aggregate of the total number of shares in dematerialised form and in physical form as at March 31, 2025.
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Integrated Annual Report 2024-25428 CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION [Issued in accordance with the provisions of Regulation 17(8) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015] To the Board of Directors of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) Dear Sirs/Madams, We have reviewed the consolidated financial statements read with the cash flow statement of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) for the year ended March 31, 2025 and that to the best of our knowledge and belief, we state that; a) (i) these financial statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; (ii) these financial statements together present a true and fair view of the Company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations. b) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the period which are fraudulent, illegal or in violation of the Company’s code of conduct. c) We accept responsibility for establishing and maintaining internal controls for financial reporting. We have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and have disclosed to the Auditors and the Audit Committee, deficiencies, if any, in the design or operation of such internal controls of which we are aware and steps taken or proposed to be taken for rectifying these deficiencies. d) We have indicated to the Auditors and the Audit Committee: (i) that there were no significant changes in internal control over financial reporting during the period; (ii) that there were no significant changes in accounting policies made during the year; and (iii) that there were no instances of significant fraud of which we have become aware of. Yours sincerely, Sudipta Roy Sachinn Joshi Managing Director Chief Financial Officer and Chief Executive Officer DIN: 08069653 Place: Mumbai Date: April 25, 2025
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Corporate Overview Statutory Reports Financial Statements L&T Finance 429 CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS [Pursuant to Regulation 34(3) read with sub-clause (10)(i) of Clause C of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015] To, The Members of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) Brindavan, Plot No. 177, C.S.T Road, Kalina, Santacruz (East), Mumbai - 400098 IN We have examined the relevant registers, records, forms, returns and disclosures received from the Directors of L&T Finance Limited (Formerly known as L&T Finance Holdings Limited) having CIN L67120MH2008PLC181833 and having registered office at Brindavan, Plot No. 177, C.S.T Road, Kalina, Santacruz (East), Mumbai – 400098 IN (hereinafter referred to as ‘the Company’), produced before us by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Sub-clause 10(i) of Clause C of Schedule V of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. In our opinion and to the best of our information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to us by the Company, we hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ending on March 31, 2025 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs or any such other Statutory Authority. Sr. No. Name of the Director DIN Designation Date of appointment/ re-appointment 1. Sekharipuram Narayanan Subrahmanyan 02255382 Non- Executive Director and Chairman 28/02/2022 2. Sudipta Roy 08069653 Managing Director & Chief Executive Officer 24/01/2024 3. Dinanath Mohandas Dubhashi^ 03545900 Whole-time Director 14/04/2021 4. Ramamurthi Shankar Raman 00019798 Non-Executive Director 01/05/2008 5. Thomas Mathew Thumpeparambil 00130282 Independent Director 01/07/2020 6. Rajani Rajiv Gupte 03172965 Independent Director 28/06/2018 7. Rahavan Seetharaman 01846777 Independent Director 23/01/2024 8. Nishi Vasudeva 03016991 Independent Director 15/03/2024 9. Pavninder Singh* 03048302 Nominee Director 15/06/2017 ^Mr. Dinanath Dubhashi ceased to be Whole Time Director of the Company w.e.f. May 1, 2024. *Mr. Pavninder Singh ceased as Nominee Director of the Company w.e.f. June 13, 2024. Ensuring the eligibility for the appointment/continuity of every Director on the Board is the responsibility of the management of the Company. Our responsibility is to express an opinion on these based on our verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company. Place : Mumbai Date : April 18, 2025 Office Address : Annex-103, Dimple Arcade, Asha Nagar, Kandivali (East), Mumbai - 400101. ALWYN JAY & Co. Company Secretaries Jay D’Souza FCS.3058 (Partner) Certificate of Practice No.6915 UDIN : F003058G000146960
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Integrated Annual Report 2024-25430 PRACTICING COMPANY SECRETARIES’ CERTIFICATE ON COMPLIANCE WITH THE CORPORATE GOVERNANCE REQUIREMENTS UNDER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 To , The Members of L&T Finance Limited, (formerly known as L&T Finance Holdings Limited) 1. We have examined the compliances of the conditions of Corporate Governance by L&T Finance Limited (formerly known as L&T Finance Holdings Limited) (“the Company”) for the financial year ended March 31, 2025, as stipulated in Regulations 17 to 27, clauses (b) to (i) of Regulation 46(2) and paras C, D and E of Schedule V of SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 (‘SEBI Listing Regulations’). 2. The compliance of the conditions of Corporate Governance is the responsibility of the management of the Company. Our examination was limited to review of procedures and implementation thereof, as adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. 3. In our opinion and to the best of our information and according to the explanations given to us and representations made by the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the SEBI Listing Regulations for the financial year ended March 31, 2025. 4. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company. Place : Mumbai Date : April 18, 2025 Office Address : Annex-103, Dimple Arcade, Asha Nagar, Kandivali (East), Mumbai - 400101. ALWYN JAY & Co. Company Secretaries Jay D’Souza FCS.3058 (Partner) Certificate of Practice No.6915 UDIN : F003058G000147004
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Corporate Overview Statutory Reports Financial Statements L&T Finance 431 Independent Auditors’ Report To The Members of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) Report on the Audit of the Standalone Financial Statements Opinion 1. We have audited the accompanying Standalone Financial Statements of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) (the “Company”), which comprise the Standalone Balance Sheet as at March 31, 2025, and the Standalone Statement of Profit and Loss (including Other Comprehensive Income), and the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity for the year then ended, and notes to the Standalone Financial Statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as “Standalone Financial Statements ”). 2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 (the “Act”) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (“Ind AS”) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India, of the state of affairs (financial position) of the Company as at March 31, 2025, and its profit (financial performance including other comprehensive income), and its cash flows and the changes in equity for the year ended on that date . Basis for Opinion 3. We conducted our audit of the financial statements in accordance with the Standards on Auditing (“SAs”) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors’ Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the Standalone Financial Statements. Key Audit Matters 4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current year. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How the matter was addressed in our audit Allowance for Expected Credit Loss on Retail Loan Assets [Refer to the Accounting Policies Note 1.7 Impairment, Note 1.9 Presentation of allowance for ECL in the Balance Sheet, Note 06 & 47 to the Standalone Financial Statements] As at March 31, 2025, Retail loan assets aggregated Rs. 91,642.36 crores (net of expected credit losses of Rs. 3,536.75 crores), constituting 97.73% of the Company’s loan book. Significant judgement is used in classifying these loan assets and applying appropriate measurement principles. ECL on such loans carried at amortised cost is a critical estimate involving a greater level of management judgement. Our audit procedures were focused on assessing the appropriateness of management’s judgement and estimates used in the impairment analysis that included, but were not limited to, the following: Reviewed the Board Approved Policy and procedures & associates design/controls and expected credit loss memo concerning the assessment of credit and other risks.
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Integrated Annual Report 2024-25432 Key Audit Matter How the matter was addressed in our audit As part of our risk assessment, we determined that the ECL on such loan assets has a high degree of estimation uncertainty, with a potential range of reasonable outcomes for the standalone financial statements. The significant assumptions that we focused on in our audit included those with greater levels of management judgement and for which variations had the most significant impact on ECL. The key areas where we identified greater levels of management judgement and therefore increased levels of audit focus in the Company’s estimation of ECLs are: Each borrower is classified into Stage 1, 2, 3 based on the objective criteria of Day Past Due (DPD) status as of the reporting date and other loss indicators, as applicable. Such classification by borrower is done across all facilities provided to the borrower, i.e. maximum of the DPDs from among the different facilities [“Max DPD”] provided to that borrower. Inherently, significant judgment is involved in the use of models to estimate ECL which includes determining Exposures at Default (“EAD”), Probabilities of Default (“PD”) and Loss Given Default (“LGD”). The PD and the LGD are the key drivers of estimation complexity and as a result are considered the most significant judgments in the Company’s modelling approach. The modelling methodologies used to estimate ECL are developed using historical experience. The impact of the prevailing macroeconomic conditions has also resulted in certain limitations in the reliability of these methodologies to forecast the extent and timing of future customer defaults or potential credit risks and therefore in estimates of ECL. In addition, modelling methodologies do not necessarily incorporate all factors that are relevant to estimating ECL, such as differentiating the impact on industry sectors and economic conditions. These limitations are attempted to be addressed with management overlay, the measurement of which is inherently judgmental and subject to a high level of estimation uncertainty. Obtained an understanding of the modelling techniques adopted by the Company including the key inputs and assumptions. Assessing the design, implementation and operating effectiveness of key internal financial controls including monitoring process of overdue loans (including those which became overdue after the reporting date), measurement of provision, stage-wise classification of loans, identification of NPA accounts, assessing the reliability of management information. Evaluated the appropriateness of the Company’s determination of Significant Increase in Credit Risk (“SICR”) in accordance with the applicable accounting standard and the basis for classification of various exposures into various stages. Testing key controls relating to selection and implementation of material macro-economic variables and the controls over the scenario selection and application of probability weights and computation of probability of default and loss given default percentages. Reviewed the critical assumptions and input data used in the estimation of expected credit loss for specific key credit risk parameters, such as the movement between stages, Exposure at default (EAD), probability of default (PD) or loss given default (LGD). Involved Information system resource to obtain comfort over data integrity and process of report generation through interface of various information systems. Tested controls placed over key inputs, data and assumptions impacting ECL calculations to assess the completeness, accuracy and relevance of data and reasonableness of economic forecasts, weights, and model assumptions applied as detailed below: • Verified the completeness and accuracy of the Exposure at Default (“EAD”) and the classification thereof into stages consistent with the definitions applied in accordance with the policy approved by the Board of Directors. • Checked the appropriateness of information used in the estimation of the Probability of Default (“PD”) and Loss given Default (“LGD”) for the different stages depending on the nature of the portfolio reconciled the total
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Corporate Overview Statutory Reports Financial Statements L&T Finance 433 Key Audit Matter How the matter was addressed in our audit retail considered for ECL assessment with the books of accounts to ensure the completeness. • Performed test of details over model calculations testing through re-performance, where possible. • Tested appropriateness of staging of borrowers based on DPD and other loss indicators. • Tested the factual accuracy of information such as period of default and other related information used in estimating the PD. • Evaluated the reasonableness of applicable assumptions included in LGD computation. • Evaluated the methodology used to determine macroeconomic overlays and adjustments to the output of the ECL model. Assessed whether the disclosures on key judgements, assumptions and quantitative data with respect to impairment of loans (including restructuring related disclosures) in the Standalone Financial Statements are appropriate and sufficient. Verified the manner of preparation of information w.r.t. to provisions and disclosures in the Standalone Financial Statements. Obtained written representations from management and those charged with governance on whether they believe significant assumptions used in calculation of expected credit losses are reasonable. Information Technology (“IT”) Systems and Controls The Company has a complex IT architecture to support its day-to-day business operations. High volume of transactions are processed and recorded on single or multiple applications. The reliability and security of IT systems plays a key role in the business operations of the Company. Since large volume of transactions are processed daily, IT controls are required to ensure that applications process data as expected and that changes are made in an appropriate manner. Appropriate IT general controls and application controls are required to ensure that such IT systems are able to process the data, as required, completely, accurately and consistently for reliable financial reporting. We have identified ‘IT systems and controls’ as a key audit matter because Our Audit procedures included the following, but not limited to: Involved IT specialists as part of the audit for the purpose of testing the IT general controls and application controls (automated and semi automated controls) to determine the accuracy of the information produced by the Company’s IT systems. With respect to the “In-scope IT systems” identified as relevant to the audit of the financial statements and financial reporting process of the Company, we have evaluated and tested relevant IT general controls. On such “In-scope IT systems” we have performed the following procedures:
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Integrated Annual Report 2024-25434 Key Audit Matter How the matter was addressed in our audit of the high-level of automation, significant number of systems being used by the management and the complexity of the IT architecture and its impact on the financial reporting system. Obtained an understanding of IT applications landscape implemented by the Company, including an understanding of the process, mapping of applications and understanding financial risks posed by people, process and technology. Tested design and operating effectiveness of key controls over user access management (including user access provisioning, de-provisioning, user access review, password configuration review and privilege access), change management (including compliance of change release in production environment to the defined procedures), program development (including review of data migration activity), computer operations (including testing of key controls pertaining to, backup, batch processing, incident management and data centre security. Also tested entity level controls pertaining to IT policy and procedure and business continuity plan assessment. Tested the design and operating effectiveness of certain automated controls that were considered as key internal controls over the financial reporting system. Other information 5. The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Company’s annual report but does not include the Standalone Financial Statements and our auditors’ report thereon. The Other Information is expected to be made available to us after the date of this auditor’s report. 6. Our opinion on the Standalone Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon. 7. In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. 8. When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate action as applicable under the relevant laws and regulations. Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements 9. The accompanying Standalone Financial Statements have been approved by the Company’s Board of Directors. The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Act, with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company
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Corporate Overview Statutory Reports Financial Statements L&T Finance 435 and for preventing and detecting frauds and other irregularities; selection of the appropriate accounting software for ensuring compliance with applicable laws and regulations including those related to retention of audit logs; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. 10. In preparing the Standalone Financial Statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. 11. Those Board of Directors are also responsible for overseeing the Company’s financial reporting process. Auditors’ Responsibilities for the Audit of the Standalone Financial Statements: 12. Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements. 13. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: (i) Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. (ii) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system with reference to Standalone Financial Statements in place and the operating effectiveness of such controls. (iii) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. (iv) Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. (v) Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation. 14. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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Integrated Annual Report 2024-25436 15. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. 16. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements 17. As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”), issued by the Central Government of India in terms of sub section (11) of section 143 of the Act, we give in “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable. 18. As required by Section 143(3) of the Act, we report that: (i) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. (ii) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. (iii) The Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account. (iv) In our opinion, the aforesaid Standalone Financial Statements comply with the Ind AS specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. (v) On the basis of written representations received from the directors as on March 31, 2025 taken on record by the board of directors, none of the directors is disqualified as on March 31, 2025 from being appointed as a director in terms of Section 164(2) of the Act. (vi) With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls with reference to Standalone Financial Statements. (vii) In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. 19. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us: (i) The Company has disclosed the impact of pending litigations as on March 31, 2025 on its financial position in its Standalone Financial Statements – Refer Note 37 to the Standalone Financial Statements. (ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. (iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 437 (iv) The management has represented, to the best of its knowledge and belief, that no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any persons or entities, including foreign entities (‘the intermediaries’), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (‘the Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries. (v) The management has represented, to the best of its knowledge and belief, that no funds have been received by the Company from any persons or entities, including foreign entities (‘the Funding Parties’), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether 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. (vi) Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our attention that causes us to believe that the representations under para 19(iv) and 19(v) contain any material misstatement. (vii) In our opinion and according to the information and explanations given to us, the final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with section 123 of the Act, as applicable. As stated in Note 19 to the Standalone Financial Statements, the Board of Directors of the Company has proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with Section 123 of the Act, as applicable. (viii) Based on our examination, which included test checks, the Company has used accounting softwares for maintaining its books of account, which has a feature of recording audit trail (edit log) facility and that has operated throughout the year for all relevant transactions recorded in these software. However, audit trail (edit logs) for direct changes made at the database level, if any, were not enabled. The Company has informed us that an alternate tool is being used to monitor such database-level changes, however the log of same is not preserved in accordance with statutory requirements for record retention. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with, where such functionality was enabled and logs were maintained. Additionally, except for the database-level changes as mentioned above, the audit trail has been preserved by the Company as per the statutory requirements for record retention. For Brahmayya & Co., Chartered Accountants ICAI Firm Registration No. 000515S P .S. Kumar Partner Membership No. 015590 UDIN: 25015590BMMJNQ1870 Place: Mumbai Date: April 25, 2025 For T R Chadha & Co LLP Chartered Accountants ICAI Firm Registration No. 006711N/N500028 Vikas Kumar Partner Membership No. 075363 UDIN: 25075363BMOIUQ6022 Place: Mumbai Date: April 25, 2025
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Integrated Annual Report 2024-25438 Annexure ‘A’ to the Independent Auditors’ Report Annexure ‘A’ to the Independent Auditor’s Report on the Standalone Financial Statements of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) for the year ended March 31, 2025. (Referred to in paragraph 17 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date to the members of L&T Finance Limited.) To the best of our information and according to the explanations provided to us by the Company and the books of account and records examined by us in the normal course of audit, we state that : (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment (‘PPE’) and relevant details of right of use assets. The Company has maintained proper records showing full particulars of intangible assets. (b) The Company has a regular programme of physical verification of its PPE by which all PPE are verified in a phased manner annually. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, certain PPE were physically verified by the Management during the year. In our opinion, and according to the information and explanations given to us, no material discrepancies were noticed on such verification. (c) In our opinion and according to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the Company except for the following which are not held in the name of the Company. Description of property Gross carrying value (R in crores) Held in name of Whether promoter, director or their relative or employee Period held Reason for not being held in name of company Building at Baroda 0.38 Erstwhile L&T Finance Limited No 25 Years The title deeds are in the name of erstwhile entity, which was merged with the Company in terms of the approval of the Hon’ble High Courts of Judicature (d) The Company has not revalued any of its Property, Plant and Equipment (including Right of Use Assets) or intangible assets or both during the year. (e) No proceedings have been initiated during the year or are pending against the Company as at March 31, 2025 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder. (ii) (a) The Company is engaged primarily in lending activities and consequently does not hold any physical inventories. Accordingly, paragraph 3(ii)(a) of the Order is not applicable. (b) The Company has been sanctioned working capital limits in excess of rupees five crore, in aggregate, at various point of time during the year, from banks or financial institutions which are secured on the basis of security of current assets. The quarterly returns or statements filed by the Company with such banks or financial institutions are in agreement with the books of account of the Company.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 439 (iii) (a) The provisions of paragraph 3(iii)(a) of the Order are not applicable to the Company as its principal business is to give loans; (b) In our opinion and according to the information and explanations given to us, the investments made, guarantees provided, security given and the terms and conditions of the grant of all loans and advances in the nature of loans and guarantees provided are not prejudicial to the Company’s interest. (c) In respect of the loans/advances in nature of loan, the schedule of repayment of principal and payment of interest has been stipulated by the Company. Considering that the Company is a non-banking financial company engaged in the business of granting loans, the entity-wise details of the amount, due date for payment and extent of delay (that has been suggested in the Guidance Note on CARO 2020 issued by the Institute of Chartered Accountants of India for reporting under this clause) have not been reported because it is not practicable to furnish such details owing to the voluminous nature of data generated in the normal course of the Company’s business. Further, except for the instances where there are delays or defaults in repayment of principal and/ or interest and in respect of which the Company has recognised necessary provisions in accordance with the principles of Indian Accounting Standards (Ind AS) and the guidelines issued by the Reserve Bank of India (“RBI”) for Income Recognition and Asset Classification (which has been disclosed by the Company in Note 6 and 47 to the Standalone Financial Statements), the parties are repaying the principal amounts, as stipulated, and are also regular in payment of interest, as applicable. (d) In respect of the loans/advances in nature of loans, the total amount overdue for more than ninety days as at March 31, 2025, is 3,217.72 crores. In such instances, in our opinion, based on information and explanations provided to us, reasonable steps have been taken by the Company for the recovery of the principal amounts and the interest thereon. Refer Note 6 in the standalone financial statements as at March 31, 2025. (e) The provisions of paragraph 3(iii)(e) of the Order are not applicable to the Company as its principal business is to give loans. (f) The Company has not granted any loans or advances in the nature of loans that were either repayable on demand or without specifying any terms or period of repayment. (iv) The Company has not granted any loans, made investments, or provided guarantees in contravention of provisions of section 185 of the Act. The Company has complied with the provisions of Section 186(1) of the Act; as informed, the other provisions of section 186 of the Act are not applicable to the Company. (v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits or amounts which are deemed to be deposits from the public during the year in terms of directives issued by the Reserve Bank of India or the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Accordingly, the provisions of paragraph 3(v) of the Order are not applicable to the Company. (vi) The maintenance of cost records has not been specified by the Central Government under section 148(1) of the Companies Act, 2013, for the business activities carried out by the Company. Hence reporting under paragraph 3(vi) of the Order is not applicable. (vii) (a) The Company has generally been regular in depositing undisputed statutory dues, including goods and services tax, provident fund, employees’ state insurance, income tax, cess and other material statutory dues applicable to it, to the appropriate authorities. As explained to us, the Company does not have any dues on account of sales tax, service tax, duty of customs, duty of excise and value added tax. According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees’ state insurance, income-tax, Goods and Services Tax, duty of customs, cess and other material statutory dues were in arrears as at March 31, 2025, for a period of more than six months from the date they became payable.
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Integrated Annual Report 2024-25440 (b) The details of statutory dues referred to in sub- paragraph (a) above which have not been deposited with the concerned authorities as on March 31, 2025, on account of dispute are given below: Name of the Statute and Forum where Dispute is pending Nature of the Dues Period to which the amount relates Amount Involved Amount Unpaid VAT CST-DC (Appeals) Demand of Tax on Repossessed Assets 2014-15 13.32 13.32 VAT CSTD. C.(Appeal) Disallowance of exemption claimed for deemed sale in the course of interstate and import transactions 1998-99 0.01 0.01 VAT CSTD. C.(Appeal) Disallowance of exemption claimed for deemed sale in the course of interstate and import transactions 2000-01 0.00* 0.00* VAT CSTD. C.(Appeal) Disallowance of exemption claimed for deemed sale in the course of interstate and import transactions 2012-13 0.04 0.04 VAT CSTD. C.(Appeal) Disallowance of exemption claimed for deemed sale in the course of interstate and import transactions 1995-96 0.00* 0.00* VAT CSTD. C.(Appeal) Disallowance of exemption claimed for deemed sale in the course of interstate and import transactions 1996-97 0.05 0.04 VAT CSTD. C.(Appeal) Disallowance of exemption claimed for deemed sale in the course of interstate and import transactions 2000-01 0.00* 0.00* VAT CSTD. C.(Appeal) Disallowance of exemption claimed for deemed sale in the course of interstate and import transactions 2002-03 0.00* 0.00* VAT CSTD. C.(Appeal) Disallowance of exemption claimed for deemed sale in the course of interstate and import transactions 2004-05 1.11 1.04 VAT CST-Kerala High Court Local hire purchase turnover made taxable 1999-00 0.07 0.07 VAT CST-JC (Appeal) Refusal of input tax credit (ITC) 2012-13 0.06 0.06 VAT CST-JC (Appeal) Refusal of input tax credit (ITC) 2013-14 0.09 0.09 VAT CST-JC (Appeal) Refusal of input tax credit (ITC) 2014-15 0.06 0.06 Service Tax- CESTAT Refusal of input tax credit (ITC) 2007-10 0.00* 0.00* Service Tax- CESTAT Refusal of input tax credit (ITC) 2007-08 0.24 0.24 Service Tax- CESTAT Refusal of input tax credit (ITC) 2008-09 3.54 3.10 Service Tax- CESTAT Refusal of input tax credit (ITC) 2009-10 16.65 16.14 Service Tax- CESTAT Refusal of input tax credit (ITC) 2010-11 5.03 5.03 Service Tax- CESTAT Refusal of input tax credit (ITC) 2008-11 0.00* 0.00*
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Corporate Overview Statutory Reports Financial Statements L&T Finance 441 Name of the Statute and Forum where Dispute is pending Nature of the Dues Period to which the amount relates Amount Involved Amount Unpaid Service Tax- CESTAT Additional Interest / Penal Interest / Default Interest under Declared Services 2016-17 10.00 0.00* Service Tax – The Commissioner Service Tax levied on upfront fees collected 2006-07 0.26 0.02 Service Tax - The Commissioner Service Tax levied on upfront fees collected 2007-08 3.68 0.33 Service Tax - The Commissioner Service Tax levied on upfront fees collected 2008-09 0.85 0.08 GST- GST Appellate Authority Towards Input Credit Short Reversal & Deemed Supply 2019-20 1.94 1.81 GST- GST Appellate Authority Towards Input Credit Short Reversal & Deemed Supply 2018-19 2.20 2.07 GST (Trans1)- GST appellate Authority Trans1 Credit Disallowed 2017-18 0.39 0.37 GST- GST Appellate Authority Towards Short Payment of Output Tax Liability 2017-18 0.02 0.01 GST- GST Appellate Authority Towards unmatched & Ineligible Input Credit Demand 2017-18 6.87 6.58 GST- GST Appellate Authority Towards Short Payment of Output Tax Liability 2017-18 0.00* 0.00* GST- GST Appellate Authority ITC claimed from cancelled dealers / return defaulters & tax non payers. 2017-18 0.09 0.09 GST- GST Appellate Authority Towards Audit Observations 2017-18 0.00* 0.00* GST- GST Appellate Authority Towards Audit Observations 2017-18 1.84 1.68 GST- GST Appellate Authority Demand towards Output Liability mismatch 2018-19 0.08 0.05 GST- GST Appellate Authority Demand towards ITC mismatch 2018-19 0.08 0.07 GST- GST Appellate Authority Demand towards Output Liability mismatch & ITC mismatch 2018-19 0.37 0.34 GST- GST Appellate Authority Towards Audit Observations 2018-19 16.55 15.81 GST- GST Appellate Authority Demand towards Output Liability mismatch & ITC mismatch 2018-19 0.51 0.49
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Integrated Annual Report 2024-25442 Name of the Statute and Forum where Dispute is pending Nature of the Dues Period to which the amount relates Amount Involved Amount Unpaid GST- GST Appellate Authority Demand towards ITC mismatch & Turnover clarification as per Annual Returns 2018-19 3.03 2.88 GST- GST Appellate Authority Demand towards ITC mismatch & Turnover clarification as per Annual Returns 2018-19 2.36 2.24 GST- GST Appellate Authority Demand towards ITC mismatch 2018-19 0.43 0.39 GST- GST Appellate Authority Mismatch in RCM liability paid and ITC availed 2018-19 0.04 0.03 GST- GST Appellate Authority Towards Audit Observations 2019-20 2.00 1.50 GST- GST Appellate Authority Demand towards ITC mismatch 2019-20 0.04 0.04 GST- GST Appellate Authority Excess ITC, Short payment of RCM, Other Expenses, etc 2019-20 5.36 5.07 GST- GST Appellate Authority Demand towards ITC mismatch 2019-20 4.35 4.12 GST- GST Appellate Authority Demand towards ITC mismatch 2019-20 0.01 0.00* GST- GST Appellate Authority Towards Audit Observations 2020-21 18.67 18.67 GST- GST Appellate Authority Towards Audit Observations 2020-21 1.92 1.92 GST- GST Appellate Authority Short reversal of ITC under Section 17(2) read with Rule 42, Short reversal of ITC under Section 17(2) read with Rule 43, Excess claim if ineligible ITC u/s 17(5) 2020-21 0.30 0.30 GST- GST Appellate Authority Under declaration of Output tax 2020-21 4.68 4.68 GST- GST Appellate Authority Towards Audit Observation 2020-21 0.04 0.04 GST- GST Appellate Authority Under declaration of Output tax 2020-21 0.04 0.04 GST- GST Appellate Authority Under declaration of Output tax 2020-21 0.95 0.95 GST- GST Appellate Authority Towards ITC Mismatch 2020-21 0.51 0.51
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Corporate Overview Statutory Reports Financial Statements L&T Finance 443 Name of the Statute and Forum where Dispute is pending Nature of the Dues Period to which the amount relates Amount Involved Amount Unpaid GST – Appeal Yet to be Filed Disallowance of Input Credit 2018-19 13.51 13.51 GST – Appeal Yet to be Filed Disallowance of Input Credit 2019-20 22.67 22.67 GST – Appeal Yet to be Filed Disallowance of Input Credit 2020-21 20.66 20.66 GST – Appeal Yet to be Filed Disallowance of Input Credit 2021-22 35.19 35.19 GST – Appeal Yet to be Filed Disallowance of Input Credit 2022-23 19.99 19.99 Income Tax - CIT (Appeals) - NFAC 1. Reassessment proceeding is bad in law based on change of opinion. 2007-08 0.71 0.712. Disallowance of hedging loss (actual in nature) 3. Disallowance of mark to market loss (actual in nature) Income Tax - CIT (Appeals) - NFAC 1. Disallowance of expenses pertaining to earning exempt income. 2012-13 7.95 7.95 2. Disallowance of ESOP Reimbursement expenses. Income Tax - CIT (Appeals) - NFAC 1. Disallowance of ESOP expense 2021-22 2.41 2.41 2. Disallowance of interest expense Income Tax - CIT (Appeals) - NFAC Disallowance of expense provision on which TDS not deducted 2019-20 0.08 0.08 Note : Amount less than ₹1,00,000 shown as 0.00* (viii) There were no transactions relating to previously unrecorded income that were surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 (43 of 1961) during the year. (ix) (a) The Company has not defaulted in the repayment of loans or other borrowings or in the payment of interest thereon to any lender during the year. (b) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority. (c) In our opinion and according to the information and explanations given to us, the Company has utilized the money obtained by way of term loans during the year for the purposes for which they were obtained, other than temporary parking of funds for short term period pending utilizations towards purpose for which the same are obtained. (d) According to the information and explanations provided to us and based on the overall examination of Standalone Financial Statements, and further considering the Asset Liability management mechanism
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Integrated Annual Report 2024-25444 of the Company, no funds raised on short-term basis have, prima facie, been used for long-term purposes by the Company. (e) On an overall examination of the Standalone Financial Statements of the Company, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries. (f) The Company has not raised any loans during the year on the pledge of securities held in its subsidiaries. Accordingly, paragraph 3(ix)(f) of the Order is not applicable. (x) (a) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during the year and hence reporting under paragraph 3(x)(a) of the Order is not applicable. (b) The Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year and hence reporting under paragraph 3(x)(b) of the Order is not applicable. (xi) (a) According to the information and explanations provided to us and based on the overall examination of Standalone Financial Statements, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year, other than instances of fraud noticed and reported by the management to the regulator. Refer Note No. 38 to the Financial Statements. (b) To the best of our knowledge, no report under sub-section (12) of section 143 of the Companies Act has been filed by auditors in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government during the year (c) We have taken into consideration the whistle blower complaints received by the Company during the year (and upto the date of this report), while determining the nature, timing and extent of our audit procedures. (xii) The Company is not a nidhi company and hence reporting under paragraph 3(xii) of the Order is not applicable. (xiii) In our opinion, the Company is in compliance with section 188 and 177 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the standalone financial statements, etc., as required by the applicable accounting standards. (xiv) (a) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business. (b) We have considered, the internal audit reports for the year under audit, issued to the Company during the year and till date, in determining the nature, timing and extent of our audit procedures. (xv) In our opinion, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with them and hence provisions of section 192 of the Companies Act, 2013 are not applicable to the Company. (xvi) (a) The Company is required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 (‘RBI Act’) and it has obtained the registration. (b) During the year, the Company has not conducted any non-banking financial activities or housing financial activities without a valid Certificate of Registration (‘CoR’) from the RBI as per the RBI Act, 1934. (c) The Company is not a Core Investment Company (‘CIC’) and hence reporting under paragraph 3(xvi)(c) of the Order is not applicable to the Company.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 445 (d) As per the information provided in course of our audit, the Group to which the Company belongs, does not have any CIC. (xvii) The Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year. (xviii) There has been no resignation of the statutory auditors of the Company during the year. The previous statutory auditor, KKC & Associates LLP , completed their term in accordance with the rotation requirements prescribed under the RBI Master Circular RBI/2014-15/632. (xix) On the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report, that Company is not capable of meeting its liabilities existing at the date of Balance Sheet as and when they fall due within a period of one year from the Balance Sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the Balance Sheet date, will get discharged by the Company as and when they fall due. (xx) (a) There are no unspent amounts towards Corporate Social Responsibility (CSR) on other than ongoing projects requiring a transfer to a fund specified in schedule VII to the Companies Act in compliance with second proviso to sub-section (5) of Section 135 of the said Act. Accordingly, reporting under paragraph 3(xx)(a) of the Order is not applicable for the year. (b) According to the information and explanations given to us and based on our examination of the records of the Company, there are no amount remaining unspent under sub section (5) of section 135 of the Companies Act, pursuant to any ongoing project. Accordingly, reporting under paragraph 3(xx)(b) of the Order is not applicable for the year. (xxi) The reporting under clause 3(xxi) is not applicable in respect of audit of Standalone Financial Statements of the Company. Accordingly, no comment has been included in respect of said clause under this report. For Brahmayya & Co., Chartered Accountants ICAI Firm Registration No. 000515S P .S. Kumar Partner Membership No. 015590 UDIN: 25015590BMMJNQ1870 Place: Mumbai Date: April 25, 2025 For T R Chadha & Co LLP Chartered Accountants ICAI Firm Registration No. 006711N/N500028 Vikas Kumar Partner Membership No. 075363 UDIN: 25075363BMOIUQ6022 Place: Mumbai Date: April 25, 2025
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Integrated Annual Report 2024-25446 Annexure ‘B’ to the Independent Auditors’ Report Annexure ‘B’ to the Independent Auditors’ report on the Standalone Financial Statements of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) for the year ended March 31, 2025 (Referred to in paragraph ’18 (vi)’ under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date) Report on the Internal Financial Controls with reference to Standalone Financial Statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”) 1. We have audited the internal financial controls with reference to Standalone Financial Statements of L&T Finance Limited (formerly known as L&T Finance Holdings Limited) (“the Company”) as of March 31, 2025, in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date. Management’s Responsibility for Internal Financial Controls 2. The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control with reference to Standalone Financial Statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (“ICAI”). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (the “Act”). Auditors’ Responsibility 3. Our responsibility is to express an opinion on the Company’s internal financial controls with reference to Standalone Financial Statements of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by ICAI and the Standards on Auditing (‘SA’s) prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls with reference to Standalone Financial Statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. 4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to Standalone Financial Statements and their operating effectiveness. Our audit of internal financial controls with reference to Standalone Financial Statements includes obtaining an understanding of internal financial controls with reference to Standalone Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error. Meaning of Internal Financial Controls with reference to Standalone Financial Statements 5. A Company’s internal financial controls with reference to Standalone Financial Statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Standalone Financial Statements for external purposes in accordance with generally accepted accounting principles.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 447 A Company’s internal financial controls with reference to Standalone Financial Statements includes those policies and procedures that (a) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (b) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of Standalone Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; (c) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Standalone Financial Statements. Inherent Limitations of Internal Financial Controls with reference to Standalone Financial Statements 6. Because of the inherent limitations of internal financial controls with reference to Standalone Financial Statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to Standalone Financial Statements to future periods are subject to the risk that the internal financial controls with respect to the Standalone Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion 7. In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls with reference to Standalone Financial Statements and such internal financial controls with reference to Standalone Financial Statements were operating effectively as at March 31, 2025, based on the criteria for internal control with reference to Standalone Financial Statements established by the respective Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. For Brahmayya & Co., Chartered Accountants ICAI Firm Registration No. 000515S P .S. Kumar Partner Membership No. 015590 UDIN: 25015590BMMJNQ1870 Place: Mumbai Date: April 25, 2025 For T R Chadha & Co LLP Chartered Accountants ICAI Firm Registration No. 006711N/N500028 Vikas Kumar Partner Membership No. 075363 UDIN: 25075363BMOIUQ6022 Place: Mumbai Date: April 25, 2025
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Integrated Annual Report 2024-25448 Standalone Balance Sheet as at March 31, 2025 In terms of our report attached of even date For and on behalf of the Board of Directors of For Brahmayya and Co., For T R Chadha & Co LLP L&T Finance Limited Chartered Accountants Chartered Accountants (formerly Known as L&T Finance Holdings Limited) ICAI FRN: 000515S ICAI FRN: 006711N/N500028 S. N. Subrahmanyan Sudipta Roy P .S. Kumar Vikas Kumar Non-Executive Chairman Managing Director & Partner Partner (DIN: 02255382) Chief Executive Officer Membership No. 015590 Membership No. 075363 (DIN: 08069653) Sachinn Joshi Apurva Rathod Chief Financial Officer Company Secretary Membership No: A18314 Place : Mumbai Place : Mumbai Place : Mumbai Date : April 25, 2025 Date : April 25, 2025 Date : April 25, 2025 (` in crore) Particulars Note No. As at March 31, 2025 As at March 31, 2024 A. ASSETS: 1. Financial assets (a) Cash and cash equivalents 2 2,893.66 3,561.44 (b) Bank balance other than (a) above 3 7,929.11 1,082.67 (c) Derivative financial instruments 4 0.55 185.54 (d) Receivables 5 (i) Trade receivables 116.95 247.27 (ii) Other receivables 5.57 5.68 (e) Loans 6 93,773.06 81,359.39 (f) Investments 7 11,835.98 12,374.78 (g) Other financial assets 8 388.65 634.55 1,16,943.53 99,451.32 2. Non-financial assets (a) Current tax assets (net) 311.40 289.52 (b) Deferred tax assets (net) 1,768.62 1,842.48 (c) Property, plant and equipment 9 101.93 55.92 (d) Intangible assets under development 10 45.00 35.62 (e) Other Intangible assets 10 113.82 96.13 (f) Right of use assets 34 116.99 55.64 (g) Other non-financial assets 11 631.50 524.20 3,089.26 2,899.51 Total Assets 1,20,032.79 1,02,350.83 B. LIABILITIES AND EQUITY : 1. LIABILITIES a. Financial liabilities (a) Payables 12 (i) Trade payables (i) total outstanding dues of micro enterprises and small enterprises 3.76 – (ii) total outstanding dues of creditors other than micro enterprises and small enterprises 1,364.04 1,219.81 (ii) Other payables (i) total outstanding dues of micro enterprises and small enterprises – – (ii) total outstanding dues of creditors other than micro enterprises and small enterprises – – (b) Debt securities 13 28,854.39 29,569.45 (c) Borrowings (other than debt securities) 14 61,559.22 44,430.47 (d) Subordinated liabilities 15 1,833.29 2,540.95 (e) Lease liabilities 34 125.54 62.58 (f) Other financial liabilities 16 620.14 1,051.77 94,360.38 78,875.03 b. Non-financial liabilities (a) Current tax liabilities (net) 248.89 174.48 (b) Provisions 17 50.41 34.50 (c) Other non-financial liabilities 18 78.39 71.86 377.69 280.84 2. Equity (a) Equity share capital 19 2,494.87 2,488.94 (b) Other equity 20 22,799.85 20,706.02 25,294.72 23,194.96 Total Liabilities and Equity 1,20,032.79 1,02,350.83 Material accounting policies 1 See accompanying notes forming part of the standalone financial statements2 to 56
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Corporate Overview Statutory Reports Financial Statements L&T Finance 449 Standalone Statement of Profit and Loss for the year ended March 31, 2025 (` in crore) Particulars Note No. Year ended March 31, 2025 Year ended March 31, 2024 Revenue from operations (i) Interest income 21 14,661.86 12,912.79 (ii) Dividend income 22 0.50 – (iii) Fees and commission income 23 1,077.34 661.64 (iv) Net gain on fair value changes 24 172.43 – I Total revenue from operations 15,912.13 13,574.43 II Other income 25 17.99 469.37 III Total income (I + II) 15,930.12 14,043.80 Expenses (i) Finance costs 26 5,996.73 5,377.17 (ii) Net loss on fair value changes 24 – 365.03 (iii) Net loss on derecognition of financial instruments under amortised cost category 27 275.04 457.71 (iv) Impairment on financial instruments 28 2,193.35 1,318.40 (v) Employee benefits expenses 29 2,214.40 1,804.17 (vi) Depreciation, amortisation and impairment 30 132.97 108.70 (vii) Other expenses 31 1,662.70 1,625.98 IV Total expenses 12,475.19 11,057.16 V Profit before exceptional items and tax (III – IV) 3,454.93 2,986.64 VI Exceptional items – – VII Profit before tax (V – VI) 3,454.93 2,986.64 VIII Tax expense (1) Current tax 48 756.97 704.56 (2) Deferred tax 48 80.15 (4.15) Total tax expense 837.12 700.41 IX Profit for the year 2,617.81 2,286.23 X Other comprehensive income A. (i) Items that will not be reclassified to profit or loss a) Remeasurements of the defined benefit plans (3.03) 4.69 (ii) Income tax relating to items that will not be reclassified to profit or loss 0.76 (1.18) Subtotal (A) (2.27) 3.51 B. (i) Items that will be reclassified to profit or loss a) Change in fair value of debt instruments measured at fair value through other comprehensive income 54.78 8.94 b) The effective portion of gains and loss on hedging instruments in a cash flow hedge (37.47) (8.33) (ii) Income tax relating to items that will be reclassified to profit or loss 9.43 2.10 Subtotal (B) 26.74 2.71 Total other comprehensive income (A+B) 24.47 6.22 XI Total comprehensive income for the year (IX+X) 2,642.28 2,292.45 XII Earnings per equity share: 36 Basic earnings per equity share (₹) 10.50 9.20 Diluted earnings per equity share (₹) 10.47 9.17 Material accounting policies 1 See accompanying notes forming part of the standalone financial statements 2 to 56 In terms of our report attached of even date For and on behalf of the Board of Directors of For Brahmayya and Co., For T R Chadha & Co LLP L&T Finance Limited Chartered Accountants Chartered Accountants (formerly Known as L&T Finance Holdings Limited) ICAI FRN: 000515S ICAI FRN: 006711N/N500028 S. N. Subrahmanyan Sudipta Roy P .S. Kumar Vikas Kumar Non-Executive Chairman Managing Director & Partner Partner (DIN: 02255382) Chief Executive Officer Membership No. 015590 Membership No. 075363 (DIN: 08069653) Sachinn Joshi Apurva Rathod Chief Financial Officer Company Secretary Membership No: A18314 Place : Mumbai Place : Mumbai Place : Mumbai Date : April 25, 2025 Date : April 25, 2025 Date : April 25, 2025
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Integrated Annual Report 2024-25450 Standalone Statement of Cash Flows for the year ended March 31, 2025 (` in crore) Particulars Year ended March 31, 2025 Year ended March 31, 2024 A. Cash flows from operating activities : Profit before tax 3,454.93 2,986.64 Adjustments for: Net loss/(profit) on sale of property, plant and equipment 0.48 0.63 Net loss on fair value changes (172.43) 365.03 Net loss on derecognition of financial instruments under amortised cost category 275.04 457.71 Impairment on financial instruments 2,193.35 1,318.40 Depreciation, amortisation and impairment 132.97 108.70 Share based payment to employees 39.53 38.01 Operating profit before working capital changes 5,923.87 5,275.12 Changes in working capital Adjustments for increase/(decrease) in operating liabilities Other financial liabilities (623.62) 569.68 Provisions 12.88 6.74 Trade and other payables 147.99 415.81 Other non-financial liabilities 6.53 23.49 Adjustments for (increase)/decrease in operating assets Other non-financial assets (156.13) 12.82 Other financial assets 182.75 (528.55) Trade and other receivables 131.29 (119.71) Change in other bank balance (6,846.44) 2,557.56 Cash generated from operations (1,220.87) 8,212.96 Direct taxes paid (net of refund) (700.54) (317.21) Loans (disbursed)/repayment (net) (14,686.26) (7,246.14) Net cash (used in)/generated from operating activities (A) (16,607.67) 649.61 B. Cash flows from investing activities : Purchase of property, plant and equipment (87.17) (37.77) Proceeds from sale of property, plant and equipment 5.87 0.58 Purchase of intangible assets (104.13) (81.86) Purchase of investments (4,478.81) (4,492.67) Proceeds on sale of investments 2,813.49 3,115.95 Proceeds on sale of mutual funds3 2,349.88 2,354.56 Net cash generated from investing activities (B) 499.13 858.79 C. Cash flows from financing activities Proceeds from issue of share capital including security premium on account of employee stock options 40.40 42.51 Payment of lease liabilities (18.02) (12.17) Dividend paid (622.46) (496.61) Proceeds from borrowings4 40,299.97 17,776.73 Repayment of borrowings4 (24,259.13) (24,363.13) Net cash generated from/ (used in) financing activities (C) 15,440.76 (7,052.67) Net decrease in cash and cash equivalents (A+B+C) (667.78) (5,544.27)
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Corporate Overview Statutory Reports Financial Statements L&T Finance 451 Standalone Statement of Cash Flows for the year ended March 31, 2025 (` in crore) Particulars Year ended March 31, 2025 Year ended March 31, 2024 Cash and cash equivalents at beginning of the year 3,561.44 9,105.71 Cash and cash equivalents at the end of the year 2,893.66 3,561.44 Net decrease in cash and cash equivalents (667.78) (5,544.27) Components of cash and cash equivalents Particulars As at March 31, 2025 As at March 31, 2024 Cash on hand 1.20 1.56 Balances with banks in current accounts 2,527.89 1,768.68 Bank deposits with original maturity less than three months 364.57 1,791.20 Total cash and cash equivalents 2,893.66 3,561.44 Notes: 1. Statement of standalone cash flows has been prepared under the indirect method as set out in the Ind AS 7 ”Statement of Cash Flows” as specified in the Companies (Indian Accounting Standards) Rules, 2015, as amended. 2. Purchase of Property, Plant and Equipment (PPE), represents additions to PPE and intangible assets adjusted for movement of (a) capital-work-in-progress for PPE and (b) intangible assets under development during the year. 3. Sale of investments is after adjustments of proceeds from sale / redemption of mutual fund. 4. Includes proceeds and repayment of debt securities, borrowings (other than debt securities) and subordinate liabilities. 5. Net cash generated from operating activity is determined after adjusting the following: (₹ in crore) Year ended March 31, 2025 Year ended March 31, 2024 Interest received 14,508.72 13,067.53 Dividend received 0.50 – Interest paid 6,120.63 5,225.35 6. The above standalone statement of cash flows includes ₹ 28.68 crore (previous period: ₹ 20.66 crore) towards corporate social responsibility (refer note 35). Material accounting policies 1 See accompanying notes forming part of the financial statements 2 to 56 In terms of our report attached of even date For and on behalf of the Board of Directors of For Brahmayya and Co., For T R Chadha & Co LLP L&T Finance Limited Chartered Accountants Chartered Accountants (formerly Known as L&T Finance Holdings Limited) ICAI FRN: 000515S ICAI FRN: 006711N/N500028 S. N. Subrahmanyan Sudipta Roy P .S. Kumar Vikas Kumar Non-Executive Chairman Managing Director & Partner Partner (DIN: 02255382) Chief Executive Officer Membership No. 015590 Membership No. 075363 (DIN: 08069653) Sachinn Joshi Apurva Rathod Chief Financial Officer Company Secretary Membership No: A18314 Place : Mumbai Place : Mumbai Place : Mumbai Date : April 25, 2025 Date : April 25, 2025 Date : April 25, 2025
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Integrated Annual Report 2024-25452 Standalone Statement of Changes in Equity for the year ended March 31, 2025 A. Equity share capital Particulars As at March 31, 2025 As at March 31, 2024 No. of Shares Equity share capital (` in crore) No. of Shares Equity share capital (` in crore) Issued, subscribed and fully paid up equity shares outstanding as at the beginning of the year 2,48,89,40,310 2,488.94 2,47,96,71,117 2,479.67 Changes in equity share capital due to prior period errors – – – – Restated balance at the beginning of the current reporting year 2,48,89,40,310 2,488.94 2,47,96,71,117 2,479.67 Changes in equity share capital during the year 59,27,791 5.93 92,69,193 9.27 Issued, subscribed and fully paid up equity shares outstanding as at the end of the year 2,49,48,68,101 2,494.87 2,48,89,40,310 2,488.94 B. Other equity (₹ in crore) Particulars Reserves and Surplus Fair value changes of debt instruments measured at fair value through other comprehensive income Cash flow hedging reserve Total Capital redemption reserve Debenture redemption reserve Securities premium General reserve Reserve u/s 45–IC of Reserve Bank of India Act, 1934 Reserve u/s 29C of National Housing Bank Act, 1987 Reserve u/s 36(1) (viii) of Income tax Act, 1961 Employee stock option outstanding account Impairment Reserve Retained earnings Balance as at April 1, 2023 72.05 1.14 12,373.58 379.30 2,680.45 27.42 1,031.28 141.03 32.39 2,106.29 (7.53) 1.77 18,839.17 Changes in Accounting poli- cy/ prior period errors – – – – – – – – – – – – – Restated balance at the beginning of the current reporting year 72.05 1.14 12,373.58 379.30 2,680.45 27.42 1,031.28 141.03 32.39 2,106.29 (7.53) 1.77 18,839.17 Profit for the year – – – – – – – – – 2,286.23 – – 2,286.23 Actuarial gain/(loss) on de- fined benefit plan (gratuity) (net of tax) – – – – – – – – – 3.51 – – 3.51 Other Comprehensive income for the year (net of tax) – – – – – – – – – – 8.94 (6.23) 2.71 Total comprehensive income for the year – – – – – – – – – 2,289.74 8.94 (6.23) 2,292.45 Issue of equity shares – – 90.81 – – – – (19.84) – – – – 70.97 Transfer to reserve u/s 45–IC of Reserve Bank of India Act, 1934 – – – – 457.25 – – – – (457.25) – – – Transfer to general reserve – (0.85) – 12.35 – – – (11.50) – – – – – Dividend paid – – – – – – – – – (496.61) – – (496.61) Transfer to reserve u/s 36(1) (viii) of Income tax Act – – – – – – 20.00 – – (20.00) – – – Others – – – – – – – – – 0.04 – – 0.04 Balance as at March 31, 2024 72.05 0.29 12,464.39 391.65 3,137.70 27.42 1,051.28 109.69 32.39 3,422.21 1.41 (4.46) 20,706.02 Note: 1. There is no share application money pending allotment and no monies received against share warrant. 2. There is no increase in carrying value of asset on account of revaluation as per IND AS 16 and IND AS 38, hence revaluation reserve is not required. 3. There is no compound financial instrument having equity component. 4. There is no foreign operation of the company, hence no exchange difference on translating the financial statement of foreign operations is required as per IND AS 21.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 453 Standalone Statement of Changes in Equity for the year ended March 31, 2025 Particulars Reserves and Surplus Fair value changes of debt instruments measured at fair value through other comprehensive income Cash flow hedging reserve Total Capital redemption reserve Debenture redemption reserve Securities premium General reserve Reserve u/s 45–IC of Reserve Bank of India Act, 1934 Reserve u/s 29C of National Housing Bank Act, 1987 Reserve u/s 36(1) (viii) of Income tax Act, 1961 Employee stock option outstanding account Impairment Reserve Retained earnings Balance as at April 1, 2024 72.05 0.29 12,464.39 391.65 3,137.70 27.42 1,051.28 109.69 32.39 3,422.21 1.41 (4.46) 20,706.02 Changes in Accounting policy/ prior period errors – – – – – – – – – – – – – Restated balance at the beginning of the current reporting year 72.05 0.29 12,464.39 391.65 3,137.70 27.42 1,051.28 109.69 32.39 3,422.21 1.41 (4.46) 20,706.02 Profit for the year – – – – – – – – – 2,617.81 – – 2,617.81 Actuarial gain/(loss) on defined benefit plan (gratuity) (net of tax) – – – – – – – – – (2.27) – – (2.27) Other Comprehensive income for the year (net of tax) – – – – – – – – – – 54.78 (28.04) 26.74 Total comprehensive income for the year – – – – – – – – – 2,615.54 54.78 (28.04) 2,642.28 Issue of equity shares – – 34.47 – – – – – – – – – 34.47 Employee share options (net) – – 39.09 – – – – 0.39 – – – – 39.48 Transfer to reserve u/s 45–IC of Reserve Bank of India Act, 1934 – – – – 523.56 – – – – (523.56) – – – Transfer to general reserve – – – 0.51 – – – (0.44) – – – – 0.07 Transfer to reserve u/s 36(1) (viii) of Income tax Act – – – – – – 10.00 – – (10.00) – – – Dividend paid – – – – – – – – – (622.46) – – (622.46) Others – – – – – – – – – (0.01) – – (0.01) Balance as at March 31, 2025 72.05 0.29 12,537.95 392.16 3,661.26 27.42 1,061.28 109.64 32.39 4,881.72 56.19 (32.50) 22,799.85 Note: 1. There is no share application money pending allotment and no monies received against share warrant. 2. There is no increase in carrying value of asset on account of revaluation as per IND AS 16 and IND AS 38, hence revaluation reserve is not required. 3. There is no compound financial instrument having equity component. 4. There is no foreign operation of the company, hence no exchange difference on translating the financial statement of foreign operations is required as per IND AS 21. Material accounting policies 1 See accompanying notes forming part of the standalone financial statements 2 to 56 In terms of our report attached of even date For and on behalf of the Board of Directors of For Brahmayya and Co., For T R Chadha & Co LLP L&T Finance Limited Chartered Accountants Chartered Accountants (formerly Known as L&T Finance Holdings Limited) ICAI FRN: 000515S ICAI FRN: 006711N/N500028 S. N. Subrahmanyan Sudipta Roy P .S. Kumar Vikas Kumar Non-Executive Chairman Managing Director & Partner Partner (DIN: 02255382) Chief Executive Officer Membership No. 015590 Membership No. 075363 (DIN: 08069653) Sachinn Joshi Apurva Rathod Chief Financial Officer Company Secretary Membership No: A18314 Place : Mumbai Place : Mumbai Place : Mumbai Date : April 25, 2025 Date : April 25, 2025 Date : April 25, 2025
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Integrated Annual Report 2024-25454 Notes forming part of standalone financial statements Notes forming part of standalone financial statements Brief Profile: L&T Finance Limited (formerly known as L&T Finance Holdings Limited) (the “Company”) has been incorporated under the Companies Act 1956. The Company is a subsidiary of Larsen & Toubro Limited and is registered with the Reserve Bank of India (“RBI”) as a non-deposit taking Systemically Important (NBFC-ND-SI) Company. The RBI vide its press release dated January 16, 2025 has categorised L&T Finance Limited in the Upper layer under Scale Based Regulation (SBR) for NBFCs. The Company is registered with the Reserve Bank of India (RBI), Ministry of Corporate Affairs (MCA) and Insurance Regulatory and Development Authority of India (IRDA). The registration details are as follows: Corporate Identity Number (CIN) L67120MH2008PLC181833 RBI N-13.02052 IRDA CA0867 The registered office of the Company is Brindavan, Plot no. 177, CST Road, Kalina, Santacruz (East), Mumbai - 400 098, Maharashtra, India. The financial statements are prepared on a going concern basis as the Management is satisfied that the Company shall be able to continue its business for the foreseeable future and no material uncertainty exists that may cast significant doubt on the going concern assumption. 1. Material Accounting Policies: 1.1. Statement of compliance: The financial statements have been prepared in accordance with the provisions of the Companies Act, 2013 and the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) issued by Ministry of Corporate Affairs in exercise of the powers conferred by section 133 of the Companies Act, 2013. In addition, applicable regulations of Reserve Bank of India (RBI) and the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also applied along with compliance with other statutory promulgations. 1.2. Basis of preparation: The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period. Fair value measurements under Ind AS are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at reporting date • Level 2 inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or indirectly; and • Level 3 inputs are unobservable inputs for the valuation of assets or liabilities 1.3. Presentation of financial statements: The Balance Sheet, Statement of Changes in Equity for the year and the Statement of Profit and Loss are prepared and presented in the format prescribed in the Division III to Schedule III to the Companies Act, 2013 (“the Act”) applicable for Non-Banking Finance Companies (“NBFC”). The Statement of Cash Flows has
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Corporate Overview Statutory Reports Financial Statements L&T Finance 455 Notes forming part of standalone financial statements been prepared and presented as per the requirements of Ind AS 7 “Statement of Cash Flows”. The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Division III to Schedule III to the Act, are presented by way of notes forming part of the financial statements along with the other notes required to be disclosed under the notified accounting Standards and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Amounts in the financial statements are presented in Indian Rupees in Crore rounded off to two decimal places as permitted by Division III to Schedule III to the Act. Per share data are presented in Indian Rupee to two decimal places. 1.4. Business Combination: A Common control business combination, involving entities or business in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination and where control is not transitory, is accounted for in accordance with Appendix C to Ind AS 103 “Business Combination”. The company accounts for Business combinations involving entities or businesses under common control are accounted for using the pooling of interest method as follows: • The assets and liabilities of the combining entities are reflected at their carrying amounts. • No adjustments are made to reflect fair values, or recognize new assets or liabilities. Adjustments are made only to harmonize Material accounting policies. • The financial information in the financial statements in respect of prior period are restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. • The identity of the reserves are preserved and appear in the financial statements of the transferee in same form in which they appeared in the financial statements of the transferor. The difference, if any, between the amounts recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve and is presented separately from other capital reserve with disclosure of its nature and purpose in the notes. 1.5. Financial instruments: Financial assets and financial liabilities are recognised in the Company’s balance sheet when the Company becomes a party to the contractual provisions of the instrument. Recognised financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. A financial asset and a financial liability is offset and presented on net basis in the balance sheet when there is a current legally enforceable right to set-off the recognised amounts and it is intended to either settle on net basis or to realise the asset and settle the liability simultaneously. (i) Equity Instruments Investments in Subsidiaries, Associates and Joint Ventures are accounted at cost in accordance with Ind AS 27 “Separate Financial Statements”.
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Integrated Annual Report 2024-25456 Notes forming part of standalone financial statements (a) Investment in preference shares of the subsidiary companies are treated as equity instruments if the same are convertible into equity shares or are redeemable out of the proceeds of equity instruments issued for the purpose of redemption of such investments. Investment in preference shares not meeting the aforesaid conditions are classified as debt instruments at FVTPL. (b) Investments in equity instruments issued by other than subsidiaries are classified as at FVTPL, unless the related instruments are not held for trading and the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income (ii) Financial assets The Company assesses the classification and measurement of a financial asset based on the contractual cash flow characteristics of the asset and the Company’s business model for managing the asset. For an asset to be classified and measured at amortised cost, its contractual terms should give rise to cash flows that are solely payments of principal and interest on the principal outstanding (SPPI). The Company has more than one business model for managing its financial instruments, assessed at portfolio level, which reflects how the Company manages its financial assets in order to generate cash flows. The Company’s business models determine whether cash flows will result from collecting contractual cash flows, selling financial assets or both. The Company considers all relevant information available when making the business model assessment. However, this assessment is performed on the basis of scenarios that the Company expects to occur and not to occur, such as so-called ‘worst case’ or ‘stress case’ scenarios. The Company takes into account all relevant evidence available such as: • how the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity’s key management personnel; • the risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way in which those risks are managed. The Company reassess its business models each reporting period to determine whether the business models have changed since the preceding period. If the business model under which the Company holds financial assets changes, the financial assets affected are reclassified. The classification and measurement requirements related to the new category apply prospectively from the first day of the first reporting period following the change in business model that results in the reclassification. The Company considers sale of financial assets measured at amortised cost portfolio as consistent with a business model whose objective is to hold financial assets in order to collect contractual cash flows if these sales are • due to an increase in the assets’ credit risk or • due to other reasons such as sales made to manage credit concentration risk (without an increase in the assets’ credit risk) and are infrequent (even if significant in value) or insignificant in value both individually and in aggregate (even if frequent). In addition, the Company also considers sale of such financial assets as consistent with the objective of holding financial assets in order to collect contractual cash flows if the sale is made close to the maturity of the financial assets and the proceeds from sale approximate the collection of the remaining contractual cash flows.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 457 Notes forming part of standalone financial statements Notes forming part of standalone financial statements (a) Financial assets at amortised cost Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) as per Ind AS 109 ‘Financial Instruments’ if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Trade Receivables are initially measured at their transaction price as defined in Ind AS 115. (b) Financial assets at fair value through other comprehensive income (FVTOCI) Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is achieved by both collecting contractual cash flows that give rise on specified dates to sole payments of principal and interest on the principal amount outstanding and by selling financial assets. (c) Financial assets at fair value through profit or loss (FVTPL) Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in profit or loss. Investments in equity instruments are classified as FVTPL, unless the related instruments are not held for trading and the Company irrevocably elects on initial recognition of financial asset on an asset-by-asset basis to present subsequent changes in fair value in other comprehensive income. (d) Debt instruments at amortised cost or at FVTOCI For an asset to be classified and measured at FVTOCI, the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and the contractual terms of instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt instruments that are subsequently measured at amortised cost or at FVTOCI are subject to impairment. (e) De-recognition A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily de-recognised when: • The rights to receive cash flows from the asset have expired, or • The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and • either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
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Integrated Annual Report 2024-25458 Notes forming part of standalone financial statements Notes forming part of standalone financial statements (iii) Financial liabilities (a) Financial liabilities, including derivatives, which are designated for measurement at FVTPL are subsequently measured at fair value. Financial guarantee contracts are subsequently measured at the amount of impairment loss allowance or the amount recognised at inception net of cumulative amortisation, whichever is higher. All other financial liabilities including loans and borrowings are measured at amortised cost using Effective Interest Rate (EIR) method as per Ind AS 109 ‘Financial Instruments’. (b) A financial liability is derecognised when the related obligation expires or is discharged or cancelled. 1.6. Write off: Loans and debt securities are written off when the Company has no reasonable expectations of recovering the financial asset (either in its entirety or a portion of it). This is the case when the Company determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. A write-off constitutes a derecognition event. The Company may apply enforcement activities to financial assets written off. Recoveries resulting from the Company’s enforcement activities are recorded in statement of profit and loss. 1.7. Impairment: The Company recognises loss allowances for Expected Credit Losses (ECLs) on the following financial instruments that are not measured at FVTPL: • Loans and advances to customers; • Debt investment securities; • Trade and other receivable; • Lease receivables; • Irrevocable loan commitments issued; and • Financial guarantee contracts issued. Credit-impaired financial assets A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Credit-impaired financial assets are referred to as Stage 3 assets. Evidence of credit-impairment includes observable data about the following events: • significant financial difficulty of the borrower or issuer; • a breach of contract such as a default or past due event; • the lender of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider; • the disappearance of an active market for a security because of financial difficulties; or • the purchase of a financial asset at a deep discount that reflects the incurred credit losses. It may not be possible to identify a single discrete event—instead, the combined effect of several events may have caused financial assets to become credit-impaired. The Company assesses whether debt instruments that are financial assets measured at amortised cost or FVTOCI are credit-impaired at each reporting date. To assess if corporate debt instruments are credit impaired, the Company considers factors such as bond yields, credit ratings and the ability of the borrower to raise funding.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 459 Notes forming part of standalone financial statements Notes forming part of standalone financial statements A loan is considered credit-impaired when a concession is granted to the borrower due to a deterioration in the borrower’s financial condition, unless there is evidence that as a result of granting the concession the risk of not receiving the contractual cash flows has reduced significantly and there are no other indicators of impairment. For financial assets where concessions are contemplated but not granted the asset is deemed credit impaired when there is observable evidence of credit-impairment including meeting the definition of default. The definition of default (see below) includes unlikeliness to pay indicators and a back-stop if amounts are overdue for more than 90 days. The 90-day criterion is applicable unless there is reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. Definition of default Critical to the determination of ECL is the definition of default. The definition of default is used in measuring the amount of ECL and in the determination of whether the loss allowance is based on 12-month or lifetime ECL, as default is a component of the probability of default (PD) which affects both the measurement of ECLs and the identification of a significant increase in credit risk. The Company considers the following as constituting an event of default: • the borrower is past due more than 90 days on any material credit obligation to the Company; or • the borrower is unlikely to pay its credit obligations to the Company in full. The forbearance granted to borrowers in accordance with COVID 19 Regulatory Package notified by the Reserve Bank of India (RBI) is excluded in determining the period of default (Days Past Due) in the assessment of default. When assessing if the borrower is unlikely to pay its credit obligation, the Company takes into account both qualitative and quantitative indicators. The information assessed depends on the type of the asset, for example in corporate lending a qualitative indicator used is the admittance of bankruptcy petition by National Company Law Tribunal, which is not relevant for retail lending. Quantitative indicators, such as overdue status and non-payment on another obligation of the same counterparty are key inputs in this analysis. The Company uses a variety of sources of information to assess default which are either developed internally or obtained from external sources. The definition of default is applied consistently to all financial instruments unless information becomes available that demonstrates that another default definition is more appropriate for a particular financial asset. With the exception of POCI financial assets (which are considered separately below), ECLs are required to be measured through a loss allowance at an amount equal to: • 12-month ECL, i.e. lifetime ECL that result from those default events on the financial instrument that are possible within 12 months after the reporting date, (referred to as Stage 1); or • full lifetime ECL, i.e. lifetime ECL that result from all possible default events over the life of the financial instrument, (referred to as Stage 2 and Stage 3). A loss allowance for full lifetime ECL is required for a financial instrument if the credit risk on that financial instrument has increased significantly since initial recognition (and consequently to credit impaired financial assets). For all other financial instruments, ECLs are measured at an amount equal to the 12-month ECL. ECLs are a probability-weighted estimate of the present value of credit losses. These are measured as the present value of the difference between the cash flows due to the Company under the contract and the cash flows that the Company expects to receive arising from the weighting of multiple future economic scenarios, discounted at the asset’s EIR.
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Integrated Annual Report 2024-25460 Notes forming part of standalone financial statements • for financial guarantee contracts, the ECL is the difference between the expected payments to reimburse the holder of the guaranteed debt instrument less any amounts that the Company expects to receive from the holder, the debtor or any other party. The Company measures ECL on an individual basis, or on a collective basis for portfolios of loans that share similar economic risk characteristics. Significant increase in credit risk The Company monitors all financial assets and financial guarantee contracts that are subject to the impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk the Company will measure the loss allowance based on lifetime rather than 12-month ECL. In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company compares the risk of a default occurring on the financial instrument at the reporting date based on the remaining maturity of the instrument with the risk of a default occurring that was anticipated for the remaining maturity at the current reporting date when the financial instrument was first recognised. In making this assessment, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort, based on the Company’s historical experience and expert credit assessment. Given that a significant increase in credit risk since initial recognition is a relative measure, a given change, in absolute terms, in the Probability of Default will be more significant for a financial instrument with a lower initial PD than compared to a financial instrument with a higher PD. Hitherto, in respect of the Company’s corporate loan assets, the threshold for shifting to Stage 2 was being rebutted using historical evidence from the Company’s own portfolio to 60 days past due. For the purpose of counting of day past due for the assessment of significant increase in credit risk, the special dispensations to any class of assets in accordance with COVID19 Regulatory Package notified by the Reserve Bank of India (RBI) has been applied by the company. Purchased or originated credit-impaired (POCI) financial assets POCI financial assets are treated differently because the asset is credit-impaired at initial recognition. For these assets, the Company recognises all changes in lifetime ECL since initial recognition as a loss allowance with any changes recognised in profit or loss. A favourable change for such assets creates an impairment gain. Simplified approach for trade and other receivables The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade and other receivables that do not contain a significant financing component. 1.8. Modification and derecognition of financial assets: A modification of a financial asset occurs when the contractual terms governing the cash flows of a financial asset are renegotiated or otherwise modified between initial recognition and maturity of the financial asset. A modification affects the amount and/or timing of the contractual cash flows either immediately or at a future date. In addition, the introduction or adjustment of existing covenants of an existing loan may constitute a modification even if these new or adjusted covenants do not yet affect the cash flows immediately but may affect the cash flows depending on whether the covenant is or is not met (e.g. a change to the increase in the interest rate that arises when covenants are breached).
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Corporate Overview Statutory Reports Financial Statements L&T Finance 461 Notes forming part of standalone financial statements The Company renegotiates loans to customers in financial difficulty to maximise collection and minimise the risk of default. A loan forbearance is granted in cases where although the borrower made all reasonable efforts to pay under the original contractual terms, there is a high risk of default or default has already happened and the borrower is expected to be able to meet the revised terms. The revised terms in most of the cases include an extension of the maturity of the loan, changes to the timing of the cash flows of the loan (principal and interest repayment), reduction in the amount of cash flows due (principal and interest forgiveness) and amendments to covenants. When a financial asset is modified the Company assesses whether this modification results in derecognition. In accordance with the Company’s policy a modification results in derecognition when it gives rise to substantially different terms. To determine if the modified terms are substantially different from the original contractual terms the Company considers the following: • Qualitative factors, such as contractual cash flows after modification are no longer SPPI, • Change in currency or change of counterparty, • The extent of change in interest rates, maturity, covenants. If these do not clearly indicate a substantial modification, then; (a) In the case where the financial asset is derecognised the loss allowance for ECL is remeasured at the date of derecognition to determine the net carrying amount of the asset at that date. The difference between this revised carrying amount and the fair value of the new financial asset with the new terms will lead to a gain or loss on derecognition. The new financial asset will have a loss allowance measured based on 12-month ECL except in the rare occasions where the new loan is considered to be originated- credit impaired. This applies only in the case where the fair value of the new loan is recognised at a significant discount to its revised par amount because there remains a high risk of default which has not been reduced by the modification. The Company monitors credit risk of modified financial assets by evaluating qualitative and quantitative information, such as if the borrower is in past due status under the new terms. (b) When the contractual terms of a financial asset are modified and the modification does not result in derecognition, the Company determines if the financial asset’s credit risk has increased significantly since initial recognition by comparing: • the remaining lifetime PD estimated based on data at initial recognition and the original contractual terms; with • the remaining lifetime PD at the reporting date based on the modified terms. For financial assets modified, where modification did not result in derecognition, the estimate of PD reflects the Company’s ability to collect the modified cash flows taking into account the Company’s previous experience of similar forbearance action, as well as various behavioural indicators, including the borrower’s payment performance against the modified contractual terms. If the credit risk remains significantly higher than what was expected at initial recognition the loss allowance will continue to be measured at an amount equal to lifetime ECL. The loss allowance on forborne loans will generally only be measured based on 12-month ECL when there is evidence of the borrower’s improved repayment behaviour following modification leading to a reversal of the previous significant increase in credit risk. Where a modification does not lead to derecognition the Company calculates the modification gain/loss comparing the gross carrying amount before and after the modification (excluding the ECL allowance). Then the Company measures ECL for the modified asset, where the expected cash flows arising from the modified financial asset are included in calculating the expected cash shortfalls from the original asset.
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Integrated Annual Report 2024-25462 Notes forming part of standalone financial statements The Company derecognises a financial asset only when the contractual rights to the asset’s cash flows expire (including expiry arising from a modification with substantially different terms), or when the financial asset and substantially all the risks and rewards of ownership of the asset are transferred to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain/loss that had been recognised in OCI and accumulated in equity is recognised in profit or loss, with the exception of equity investment designated as measured at FVTOCI, where the cumulative gain/loss previously recognised in OCI is not subsequently reclassified to profit or loss. On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain/loss allocated to it that had been recognised in OCI is recognised in profit or loss. A cumulative gain/loss that had been recognised in OCI is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts. This does not apply for equity investments designated as measured at FVTOCI, as the cumulative gain/loss previously recognised in OCI is not subsequently reclassified to profit or loss. 1.9. Presentation of allowance for ECL in the Balance Sheet: Loss allowances for ECL are presented in the Balance Sheet for financial assets measured at amortised cost, as a deduction from the gross carrying amount of the assets. 1.10. Assets acquired under settlement of claims: Assets acquired under settlement of claims are initially recognised on acquisition of the assets based on the fair value of the property, including cost of acquisition. Assets acquired under settlement of claims are subsequently measured at the prevailing market price/fair valuation or acquisition cost, whichever is lower, on periodic basis. Any profit or loss arising on the sale of complete unit is recognised in Statement of Profit and Loss. 1.11. Derivative financial instruments: The Company enters into swap contracts and other derivative financial instruments to hedge its exposure to foreign exchange and interest rates. Hedges of foreign exchange risk on firm commitments are accounted as cash flow hedges. The Company does not hold derivative financial instruments for speculative purpose. Cash flow hedges: In case of transaction related hedges, the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in equity as ‘Cash flow hedging reserve’. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income and accumulated in equity relating to the effective portion are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same head as the hedged item. The effective portion of the hedge is determined at the lower of the cumulative gain or loss on the hedging instrument from
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Corporate Overview Statutory Reports Financial Statements L&T Finance 463 Notes forming part of standalone financial statements inception of the hedge and the cumulative change in the fair value of the hedged item from the inception of the hedge and the remaining gain or loss on the hedging instrument is treated as ineffective portion. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised in profit or loss when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss. A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. 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, 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 in Finance Costs. 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 in Finance Cost. 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 financial instruments hedged for interest rate risk in a fair value hedge relationship are fixed rate debt issued and other borrowed funds. If the hedging instrument expires or is sold, terminated or exercised, or where the hedge no longer meets the criteria for hedge accounting, the hedge relationship is discontinued prospectively. If the relationship does not meet hedge effectiveness criteria, the Company discontinues hedge accounting from the date on which the qualifying criteria are no longer met. For hedged items recorded at amortised cost, the accumulated fair value hedge adjustment to the carrying amount of the hedged item on termination of the hedge accounting relationship is amortised over the remaining term of the original hedge using the recalculated EIR method by recalculating the EIR at the date when the amortisation begins. If the hedged item is derecognised, the unamortised fair value adjustment is recognised immediately in the statement of profit and loss. 1.12. Revenue recognition: Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured and there exists reasonable certainty of its recovery. (i) Interest and dividend income Interest income is recognised in the statement of Profit and Loss using effective interest rate (EIR) as per Ind AS 109 ‘Financial Instruments’ on all financial assets subsequently measured under amortised cost or fair value through other comprehensive income (FVTOCI) except for those classified as held for trading. The calculation of the EIR includes all fees paid or received between parties to the contract that are incremental and directly attributable to the specific lending arrangement, transaction costs, and all other premiums or discounts. For financial assets at FVTPL transaction costs are recognised in profit or loss at initial recognition. The interest income is calculated by applying the EIR to the gross carrying amount of non-credit impaired financial assets (i.e. at the amortised cost of the financial asset before adjusting for any expected credit loss allowance). For credit-impaired financial assets the interest income is calculated by applying the
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Integrated Annual Report 2024-25464 Notes forming part of standalone financial statements EIR to the amortised cost of the credit-impaired financial assets (i.e. the gross carrying amount less the allowance for expected credit losses (ECLs)). For financial assets originated or purchased credit-impaired (POCI) the EIR reflects the ECLs in determining the future cash flows expected to be received from the financial asset. Interest on delayed payments by customers are treated to accrue only on realisation, due to uncertainty of realisation and are accounted accordingly. Dividend income is recognised when the Company’s right to receive dividend is established by the reporting date and no significant uncertainty as to collectability exists. (ii) Revenue from operations other than interest income The Company recognises revenue from contracts with customers (other than financial assets to which Ind AS 109 ‘Financial instruments’ is applicable) based on a comprehensive assessment model as set out in Ind AS 115 ‘Revenue from contracts with customers’. Fees and commission income: Fee and commission income and expense include fees other than those that are an integral part of EIR and is recognised only on satisfactory completion of performance obligation. The fees included in the statement of profit and loss, include among other things, fees charged for servicing a loan, non-utilisation fees relating to loan commitments when it is unlikely that these will result in a specific lending arrangement and loan advisory fees. Bounce charges levied on customers for non-payment of instalment on the contractual date is recognised on realisation. Distribution income on distribution of insurance/other products are earned by distribution of services and products of other entities under distribution arrangements. The income is recognised on distribution on behalf of other entities subject to there being reasonable certainty of its recovery. Fees and commission expenses with regards to services are accounted for as the services are received. (iii) Net gain on fair value change: Any differences between the fair values of the financial assets classified as fair value through the profit or loss, held by the Company on the balance sheet date is recognised as an unrealised gain/loss in the statement of profit and loss. In cases there is a net gain in aggregate, the same is recognised in “Net gains on fair value changes” under revenue from operations and if there is a net loss the same is disclosed “Expenses”, in the statement of profit and loss. (iv) Income from financial instruments at FVTPL: Income from financial instruments at FVTPL includes all gains and losses from changes in the fair value of financial assets and financial liabilities at FVTPL except those that are held for trading. Interest income on financial assets held at FVTPL, is recognised under “interest income on financial assets classified at fair value through profit or loss”. (v) Other operational revenue: Other operational revenue represents income earned from the activities incidental to the business and is recognised when the right to receive the income is established as per the terms of the contract. Guarantee fees is recognised on pro rata basis over the period of the guarantee.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 465 Notes forming part of standalone financial statements 1.13. Borrowing costs: Borrowing costs include interest expense calculated using the effective interest rate method as per Ind AS 109 ‘Financial Instruments’, finance charges in respect of assets acquired on finance lease and exchange differences arising from foreign currency borrowings, to the extent they are regarded as an adjustment to interest costs. Borrowing costs net of any investment income from the temporary investment of related borrowings, that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 1.14. Property, plant and equipment (PPE): PPE including subsequent expenditure, if any, is recognised when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. PPE is stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation and cumulative impairment, if any. Cost includes all direct cost related to the acquisition of PPE and, for qualifying assets, borrowing costs capitalised in accordance with the Company’s accounting policy. Land and buildings held for use are stated in the balance sheet at cost less accumulated impairment losses and accumulated depreciation, respectively. Freehold land is not depreciated. PPE not ready for the intended use on the date of the Balance Sheet are disclosed as “capital work-in- progress”. Depreciation Depreciation is recognised using straight line method so as to write off the cost of the assets (other than freehold land)) less their residual values over their useful lives specified in Schedule II to the Companies Act, 2013, or in case of assets where the useful life was determined by technical evaluation, over the useful life so determined. Depreciation method is reviewed at each financial year end to reflect expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful life and residual values are also reviewed at each financial year end with the effect of any change in the estimates of useful life/residual value is accounted on prospective basis. Depreciation for additions to/deductions from, owned assets is calculated pro rata to the period of use. Depreciation charge for impaired assets is adjusted in future periods in such a manner that the revised carrying amount of the asset is allocated over its remaining useful life. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is recognised in profit or loss. 1.15. Intangible assets: Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets are stated at original cost net of tax/duty credits availed, if any, less accumulated amortisation and cumulative impairment. Direct expenses and administrative and other general overhead expenses that are specifically attributable to acquisition of intangible assets are allocated and capitalised as a part of the cost of the intangible assets.
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Integrated Annual Report 2024-25466 Notes forming part of standalone financial statements Subsequent expenditure related to an item of intangible asset are added to its gross value only if it increases the future benefits of the existing asset, if it is probable that future economic benefit will flow to the Company from that expenditure and cost can be measured reliably. Other repairs and maintenance costs are expensed off as and when incurred. Intangible assets not ready for the intended use on the date of Balance Sheet are disclosed as “Intangible assets under development”. Amortisation Intangible assets are amortised on straight line basis over the estimated useful life. The method of amortisation and the remaining useful life are reviewed at the end of each accounting year with the effect of any changes in the estimate being accounted for on a prospective basis. An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are recognised in profit or loss when the asset is derecognised. 1.16. Impairment of tangible and intangible assets other than goodwill: As at the end of each accounting year, the Company reviews the carrying amounts of its PPE and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the PPE, and intangible assets are tested for impairment so as to determine the impairment loss, if any. Goodwill and the intangible assets with indefinite life are tested for impairment each year. Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined: (i) in the case of an individual asset, at the higher of the net selling price and the value in use; and (ii) in the case of a cash generating unit (the smallest identifiable Company of assets that generates independent cash flows), at the higher of the cash generating unit’s net selling price and the value in use. Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, such deficit is recognised immediately in the Statement of Profit and Loss as impairment loss and the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. For this purpose, the impairment loss recognised in respect of a cash generating unit is allocated first to reduce the carrying amount of any goodwill allocated to such cash generating unit and then to reduce the carrying amount of the other assets of the cash generating unit on a pro-rata basis. When an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit), except for allocated goodwill, is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss is recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss (other than impairment loss allocated to goodwill) is recognised immediately in the Statement of Profit and Loss.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 467 Notes forming part of standalone financial statements 1.17. Employee benefits: (i) Short term employee benefits: Employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits and are expensed in the period in which the employee renders the related service. Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service. (ii) Post-employment benefits: (a) Defined contribution plans: The Company’s superannuation scheme, state governed provident fund scheme, employee state insurance scheme and employee pension scheme are defined contribution plans. The contribution paid/payable under the schemes is recognised during the period in which the employee renders the related service. (b) Defined benefit plans: The employees’ gratuity fund schemes and employee provident fund schemes managed by board of trustees established by the Company, the post-retirement medical care plan and the Parent Company pension plan represent defined benefit plans. The present value of the obligation under defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method. The obligation is measured at the present value of the estimated future cash flows using a discount rate based on the market yield on government securities of a maturity period equivalent to the weighted average maturity profile of the defined benefit obligations at the Balance Sheet date. Remeasurement, comprising actuarial gains and losses, the return on plan assets (excluding amounts included in net interest on the net defined benefit liability or asset) and any change in the effect of asset ceiling (if applicable) is recognised in other comprehensive income and is reflected in retained earnings and the same is not eligible to be reclassified to profit or loss. Defined benefit costs comprising current service cost, past service cost and gains or losses on settlements are recognised in the Statement of Profit and Loss as employee benefit expenses. Interest cost implicit in defined benefit employee cost is recognised in the Statement of Profit and Loss under finance cost. Gains or losses on settlement of any defined benefit plan are recognised when the settlement occurs. Past service cost is recognised as expense at the earlier of the plan amendment or curtailment and when the Company recognises related restructuring costs or termination benefits. In case of funded plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans to recognise the obligation on a net basis. (iii) Long term employee benefits: The obligation recognised in respect of long term benefits such as long term compensated absences is measured at present value of estimated future cash flows expected to be made by the Company and is recognised in a similar manner as in the case of defined benefit plans vide (ii) (b) above. (iv) Termination benefits: Termination benefits such as compensation under employee separation schemes are recognised as expense when the Company’s offer of the termination benefit is accepted or when the Company recognises the related restructuring costs whichever is earlier.
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Integrated Annual Report 2024-25468 Notes forming part of standalone financial statements 1.18. Leases: a. The Company as a lessee, recognises the right-of-use asset and lease liability at the lease commencement date. Initially the right-of-use asset is measured at cost which comprises the initial amount of the lease liability adjusted for any lease payments, less any lease incentives received made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company’s incremental borrowing rate. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, or a change in the estimate of the amount expected to be payable under a residual value guarantee, or a change in the assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. The right-of-use asset is measured by applying cost model i.e. right-of-use asset at cost less accumulated depreciation /impairment losses. The right-of-use assets are depreciated from the date of commencement of the lease on a straight-line basis over the shorter of the lease term and the useful life of the underlying asset. Carrying amount of lease liability is increased by interest on lease liability and reduced by lease payments made. Lease payments associated with following leases are recognised as expense on straight-line basis: • Low value leases; and • Leases which are short-term. b. The Company as a lessor, classifies leases as either operating lease or finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. Initially asset held under finance lease is recognised in balance sheet and presented as a receivable at an amount equal to the net investment in the lease. Finance income is recognised over the lease term, based on a pattern reflecting a constant periodic rate of return on Company’s net investment in the lease. A lease which is not classified as a finance lease is an operating lease. Accordingly, the Company recognises lease payments as income on a straight-line basis in case of assets given on operating leases. The Company presents underlying assets subject to operating lease in its balance sheet under the respective class of asset. 1.19. Cash and cash equivalents: Cash and cash equivalents include cash on hand and other short term highly liquid investments with original maturities of upto three months that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 1.20. Securities premium account: (i) Securities premium includes: • The difference between the face value of the equity shares and the consideration received in respect of shares issued pursuant to Stock Option Scheme. • The fair value of the stock options which are treated as expense, if any, in respect of shares allotted pursuant to Stock Options Scheme.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 469 Notes forming part of standalone financial statements (ii) The issue expenses of securities which qualify as equity instruments are written off against securities premium account. 1.21. Share-based payment arrangements: The stock options granted to employees pursuant to the Company’s Stock Options Schemes, are measured at the fair value of the options at the grant date. The fair value of the options is treated as discount and accounted as employee compensation cost over the vesting period on a straight-line basis. The amount recognised as expense in each year is arrived at based on the number of grants expected to vest. If a grant lapses after the vesting period, the cumulative discount recognised as expense in respect of such grant is transferred to the general reserve within equity. 1.22. Accounting and reporting of information for Operating Segments: Operating segments are those components of the business whose operating results are regularly reviewed by the chief operating decision making body in the Company to make decisions for performance assessment and resource allocation. The reporting of segment information is the same as provided to the management for the purpose of the performance assessment and resource allocation to the segments. Segment accounting policies are in line with the accounting policies of the Company. 1.23. Foreign currencies: (i) The functional currency and presentation currency of the Company is Indian Rupee. Functional currency of the Company and foreign operations has been determined based on the primary economic environment in which the Company and its foreign operations operate considering the currency in which funds are generated, spent and retained. (ii) Transactions in currencies other than the Company’s functional currency are recorded on initial recognition using the exchange rate at the transaction date. At each Balance Sheet date, foreign currency monetary items are reported at the prevailing closing spot rate. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated. Exchange differences that arise on settlement of monetary items or on reporting of monetary items at each Balance Sheet date at the closing spot rate are recognised in the Statement of Profit and Loss in the period in which they arise. (iii) Financial statements of foreign operations whose functional currency is different than Indian Rupees are translated into Indian Rupees as follows: A. assets and liabilities for each Balance Sheet presented are translated at the closing rate at the date of that Balance Sheet; B. income and expenses for each income statement are translated at average exchange rates; and C. all resulting exchange differences are recognised in other comprehensive income and accumulated in equity as foreign currency translation reserve for subsequent reclassification to profit or loss on disposal of such foreign operations. 1.24. Taxation: Current Tax: Tax on income for the current period is determined on the basis of taxable income (or on the basis of book profits wherever minimum alternate tax is applicable) and tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on the expected outcome of assessments/appeals.
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Integrated Annual Report 2024-25470 Notes forming part of standalone financial statements Deferred Tax: Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the Company’s financial statements and the corresponding tax bases used in computation of taxable profit and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are generally recognised for all taxable temporary differences to the extent that is probable that taxable profits will be available against which those deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets relating to unabsorbed depreciation/business losses/losses under the head “capital gains” are recognised and carried forward to the extent of available taxable temporary differences or where there is convincing other evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets in respect of unutilised tax credits are recognised to the extent it is probable of such unutilised tax credits will get realised. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of reporting period, to recover or settle the carrying amount of its assets and liabilities. Transaction or event which is recognised outside profit or loss, either in other comprehensive income or in equity, is recorded along with the tax as applicable. 1.25. Provisions, contingent liabilities and contingent assets: Provisions are recognised only when: (i) an company entity has a present obligation (legal or constructive) as a result of a past event; and (ii) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and (iii) a reliable estimate can be made of the amount of the obligation Provision is measured using the cash flows estimated to settle the present obligation and when the effect of time value of money is material, the carrying amount of the provision is the present value of those cash flows. Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received. Contingent liability is disclosed in case of: a. a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation; and b. a present obligation arising from past events, when no reliable estimate is possible. Contingent assets are disclosed where an inflow of economic benefits is probable. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. Where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under such contract, the present obligation under the contract is recognised and measured as a provision.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 471 Notes forming part of standalone financial statements 1.26. Commitment: Commitments are future liabilities for contractual expenditure, classified and disclosed as follows: (a) estimated amount of contracts remaining to be executed on capital account and not provided for; (b) uncalled liability on shares and other investments partly paid; (c) funding related commitment to associate companies; and (d) other non-cancellable commitments, if any, to the extent they are considered material and relevant in the opinion of management. Other commitments related to sales/procurements made in the normal course of business are not disclosed to avoid excessive details. 1.27. Statement of cash flows: Statement of cash flows is prepared segregating the cash flows into operating, investing and financing activities. Cash flow from operating activities is reported using indirect method adjusting the profit before tax for the effects of: (i) changes during the period in operating receivables and payables transactions of a non-cash nature; (ii) non-cash items such as depreciation, provisions, deferred taxes, unrealised gains and losses; and (iii) all other items for which the cash effects are investing or financing cash flows. Cash and cash equivalents (including bank balances) shown in the Statement of Cash Flows exclude items which are not available for general use as on the date of Balance Sheet. 1.28. Earnings per share: The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares. 1.29. Key source of estimation: The preparation of financial statements in conformity with Ind AS requires that the management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of the date of the financial statements. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates include useful lives of property, plant and equipment & intangible assets, expected credit loss on loan books, future obligations in respect of retirement benefit plans, fair value measurement etc. Difference, if any, between the actual results and estimates is recognised in the period in which the results are known. 1.30. Recent Pronouncements: The Ministry of Corporate Affairs (“MCA”) notifies new standards or amendment to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2025, MCA has notified Ind AS – 117 Insurance contracts and amendments to Ind AS 116 – Leases, relating to sale and leaseback transactions, applicable to the Company w.e.f. April 1, 2024. The Company has reviewed the new pronouncements based on its evaluation has determined that it does not have any significant impact in its financial statements.
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Integrated Annual Report 2024-25472 Notes forming part of standalone financial statements 2 Cash and cash equivalents (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 Cash on hand 1.20 1.56 Balances with banks in current accounts 2,527.89 1,768.68 Bank deposits with original maturity less than three months 364.57 1,791.20 Total cash and cash equivalents 2,893.66 3,561.44 3 Bank balance other than note 2 above (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 Earmarked balances with banks - Unclaimed dividend on equity shares 1.31 1.12 - Unclaimed redemption proceeds and dividend on preference shares 0.78 0.78 - Unclaimed matured debentures 156.86 166.34 Balances with banks to the extent held as margin money or security against borrowing, guarantees, other commitments 4,686.30 913.31 Banks deposits with maturity greater than three months and less than twelve months 3,083.86 1.12 Total bank balance other than note 2 above 7,929.11 1,082.67 4 Derivative financial instruments (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 Part I (i) Currency derivatives: Notional Amounts – Cross currency Interest rate swap 7,492.08 1,902.27 Fair value assets – Cross currency Interest rate swap 48.49 185.87 Fair value liabilities – Cross currency Interest rate swap (47.94) (2.88) Subtotal (i) 0.55 182.99
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Corporate Overview Statutory Reports Financial Statements L&T Finance 473 Notes forming part of standalone financial statements Particulars As at March 31, 2025 As at March 31, 2024 (ii) Interest rate derivatives: Notional Amounts – Overnight Interest rate swaps – 400.00 Fair Value Assets – Overnight Interest rate swaps – 2.55 Fair Value Liabilities – Overnight Interest rate swaps – – Subtotal (ii) – 2.55 Total derivative financial instruments 0.55 185.54 Part II Included in above (Part I) are derivatives held for hedging and risk management purposes as follows: (i) Cash flow hedging: Notional Amounts – Currency derivatives 7,492.08 1,902.27 – Interest rate derivatives – 400.00 Fair value assets – Currency derivatives 48.49 185.87 – Interest rate derivatives – 2.55 Fair Value Liabilities – Currency derivatives (47.94) (2.88) – Interest rate derivatives – – Total derivative financial instruments 0.55 185.54 Note: 1. The company has a board approved policy for entering in to derivative transcations. Derivative comprises of currency and interest rate swap. Refer the accounting policy for derivative financial instruments. 5 Receivables (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 (i) Trade receivables (refer note 5(iii)) (a) Receivables considered good – secured – – (b) Receivables considered good – unsecured 116.95 247.27 (c) Receivables which have significant increase in credit risk – – (d) Receivables – credit impaired Receivables 7.59 7.59 Less : Impairment loss allowance (7.59) (7.59) Total trade receivables (i) 116.95 247.27 (` in crore)
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Integrated Annual Report 2024-25474 Notes forming part of standalone financial statements Particulars As at March 31, 2025 As at March 31, 2024 (ii) Other receivables (a) Receivables considered good – Secured – – (b) Receivables considered good – unsecured 5.56 3.23 (c) Receivables which have significant increase in Credit Risk – – (d) Receivables from related parties* (refer note : 32) 0.01 2.45 (e) Receivables – credit impaired Receivables 10.07 10.93 Impairment loss allowance (10.07) (10.93) Total other receivables (ii) 5.57 5.68 Total receivables (i+ii) 122.52 252.95 *There are no dues by Directors or other officers of the company or any of them either severally or jointly with any other person or debts due by firms or private companies respectively in which any director is a partner or a director or a member. (iii) Ageing Schedule for Trade Receivables# (` in crore) Particulars Outstanding as on March 31, 2025 TotalUnbilled Less than 6 Months 6 Months - 1 Year 1-2 years 2-3 years More than 3 years (i) Undisputed Trade receivables – considered good – 109.30 0.27 0.33 – – 109.90 (ii) Undisputed Trade Receivables – which have significant increase in credit risk – – – – – – – (iii) Receivables which have significant increase in credit risk – – – – – – – (iv) Undisputed Trade Receivables – credit impaired – – – – – 7.59 7.59 (v) Less : Impairment loss allowance – – – – – (7.59) (7.59) (vi) Disputed Trade Receivables–considered good – – – – – – – (vii) Disputed Trade Receivables – which have significant increase in credit risk – – – – – – – (viii) Disputed Trade Receivables – credit impaired – – – – – – – (ix) Unbilled 7.05 – – – – – 7.05 Total 7.05 109.30 0.27 0.33 – – 116.95 (` in crore)
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Corporate Overview Statutory Reports Financial Statements L&T Finance 475 Notes forming part of standalone financial statements (` in crore) Particulars Outstanding as on March 31, 2024 TotalUnbilled Less than 6 Months 6 Months - 1 Year 1-2 years 2-3 years More than 3 years (i) Undisputed Trade receivables – considered good – 241.38 0.30 – – – 241.68 (ii) Undisputed Trade Receivables – which have significant increase in credit risk – – – – – – – (iii) Receivables which have significant increase in credit risk – – – – – – – (iv) Undisputed Trade Receivables – credit impaired – – – – 7.59 – 7.59 (v) Less : Impairment loss allowance – – – – (7.59) – (7.59) (vi) Disputed Trade Receivables–considered good – – – – – – – (vii) Disputed Trade Receivables – which have significant increase in credit risk – – – – – – – (viii) Disputed Trade Receivables – credit impaired – – – – – – – (ix) Unbilled 5.59 – – – – – 5.59 Total 5.59 241.38 0.30 – – – 247.27 # The above ageing is prepared on the basis of date of transaction. 6 Loans (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 (A) (i) At amortised cost – Term loans 95,179.11 80,035.53 Total gross loans at amortised cost 95,179.11 80,035.53 Less: Impairment loss allowance# (3,536.75) (3,537.75) Total net loans at amortised cost (i) 91,642.36 76,497.78 (ii) At fair value through profit or Loss – Loans repayable on demand – 12.40 – Term loans 2,333.93 5,267.91 – Debentures 248.43 248.68 Total gross loans at fair value through profit or loss 2,582.36 5,528.99 Less: Impact of fair value changes (451.66) (667.38) Total net loans at fair value through profit or loss (ii) 2,130.70 4,861.61 Total net loans (A) = (i)+(ii) 93,773.06 81,359.39
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Integrated Annual Report 2024-25476 Notes forming part of standalone financial statements Particulars As at March 31, 2025 As at March 31, 2024 (B) (i) At amortised cost – Secured by tangible assets@ 51,579.46 42,732.48 – Unsecured 43,599.65 37,303.05 Total gross loans at amortised cost 95,179.11 80,035.53 Less: Impairment loss allowance# (3,536.75) (3,537.75) Total net loans at amortised cost (i) 91,642.36 76,497.78 (ii) At fair value through profit or loss: – Secured by tangible assets 2,582.36 5,528.99 – Unsecured – – Total gross loans at fair value through profit or loss 2,582.36 5,528.99 Less: Impact of fair value changes (451.66) (667.38) Total net loans at fair value through profit or loss (ii) 2,130.70 4,861.61 Total net loans (B) = (i)+(ii) 93,773.06 81,359.39 @ Includes hypothecation/mortgage under process (C) (I) Loans in India (i) At amortised cost – Public sector – – – Others 95,179.11 80,035.53 Total gross loans at amortised cost 95,179.11 80,035.53 Less: Impairment loss allowance# (3,536.75) (3,537.75) Total net loans in India at amortised cost (i) 91,642.36 76,497.78 (ii) At fair value through profit or loss: – Public sector – – – Others 2,582.36 5,528.99 Total gross loans at fair value through profit or loss 2,582.36 5,528.99 Less: Impact of fair value changes (451.66) (667.38) Total net loans at fair value through profit or loss (ii) 2,130.70 4,861.61 Total net loans in India (C)(I) = (i)+(ii) 93,773.06 81,359.39 (II) Loans outside India (i) At amortised cost – – Less: Impairment loss allowance – – Total net loans outside India at amortised cost (i) – – (ii) At fair value through profit or loss: – – Less: Impact of fair value changes – – Total net loans at fair value through profit or loss (ii) – – Total net loans outside India (C)(II) = (i)+(ii) – – Total net loans (C) = (I)+(II) 93,773.06 81,359.39 Note: There are no loans or advances, in the natures of loans, are granted to promoters, directors, KMPs and the related parties (as defined under the Companies Act 2013), either severally or jointly with any other person. # Impairment loss allowance as on March 31, 2025 is after utilisation of ₹ 400 Crore of macro prudential provision. (` in crore)
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Corporate Overview Statutory Reports Financial Statements L&T Finance 477 Notes forming part of standalone financial statements 7 Investments (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 A. Investments at cost (i) In equity share of Subsidiaries – Unquoted 167.85 167.85 Total (A) 167.85 167.85 B. Investments carried at fair value through profit or loss (i) In quoted equity shares 10.23 16.14 (ii) In unquoted equity shares 39.54 1.73 (iii) In debt securities 90.02 113.84 (iv) In mutual funds – 2,353.43 (v) In other securities– Subsidiaries 46.81 72.77 (vi) In other securities– Other than subsidiaries 22.22 27.38 (vii) In security receipts 5,862.44 6,769.50 Total (B) 6,071.26 9,354.78 C. Investments carried at fair value through other comprehensive income (FVOCI) (i) In Debt securities 409.75 404.97 (ii) In Bonds 94.47 93.31 (iii) In Government securities 5,092.65 2,353.86 (iv) In Pass through certificates – – Total (C) 5,596.87 2,852.15 Total investments (A+B+C) 11,835.98 12,374.78 (i) Investments outside India – – (ii) Investments in India 11,835.98 12,374.78 Total Investments 11,835.98 12,374.78 8 Other financials assets (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 Security deposit 73.45 74.24 Collateralized borrowing and lending obligation (TREPS) 299.95 499.91 Other advances 15.25 60.40 Total other financials assets 388.65 634.55
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Integrated Annual Report 2024-25478 Notes forming part of standalone financial statements 9 Property, plant and equipment (` in crore) Assets Gross carrying value*** Accumulated depreciation*** Net carrying value*** As at April 01, 2024 Additions Disposals/ Adjust- ment As at March 31, 2025 As at April 01, 2024 For the Year Disposals/ Adjust- ment As at March 31, 2025 As at March 31, 2025 As at March 31, 2024 Buildings : Owned* 0.38 – – 0.38 0.07 0.01 – 0.08 0.30 0.31 Lease hold renovation : Owned 13.05 28.25 2.27 39.03 7.12 4.08 2.20 9.00 30.03 5.93 Plant and equipment : Lease out 2.80 – 2.80 – 2.16 0.01 2.17 – – 0.64 Computers : Owned 57.70 18.48 30.19 45.99 40.94 9.86 27.62 23.18 22.81 16.76 Furniture and fixtures Owned 11.74 10.26 3.30 18.70 6.92 5.32 2.81 9.43 9.27 4.82 Leased out 4.74 – 4.74 – 4.06 – 4.06 – – 0.68 Sub total – Furniture and fixtures 16.48 10.26 8.04 18.70 10.98 5.32 6.87 9.43 9.27 5.50 Office equipment Owned 28.67 17.75 4.31 42.11 16.68 8.95 3.60 22.03 20.08 11.99 Leased out 0.01 – 0.01 – – – – – – 0.01 Sub total – Office equipment 28.68 17.75 4.32 42.11 16.68 8.95 3.60 22.03 20.08 12.00 Vehicles Owned 21.65 12.43 2.89 31.19 6.95 6.58 1.78 11.75 19.44 14.70 Leased out 0.22 – 0.22 – 0.14 – 0.14 – – 0.08 Sub total – Vehicles 21.87 12.43 3.11 31.19 7.09 6.58 1.92 11.75 19.44 14.78 Total 140.96 87.17 50.73 177.40 85.04 34.81 44.38 75.47 101.93 55.92 Note: *The tittle deed of the immovable property acquired under the scheme of amalgamation, is held in the name of erstwhile L&T Finance Limited which was merged with the Company with effect from 01 April, 2016, also the tittle deed holder is not a promoter, director or related party of the company. ***The Company has not revalued its property plant and equipment during the year and hence there is no movement for revaluation shown separately. (` in crore) Assets Gross carrying value*** Accumulated depreciation*** Net carrying value*** As at April 01, 2023 Additions Disposals/ Adjust- ment As at March 31, 2024 As at April 01, 2023 For the Year Disposals/ Adjust- ment As at March 31, 2024 As at March 31, 2024 As at March 31, 2023 Buildings : Owned* 0.38 – – 0.38 0.06 0.01 – 0.07 0.31 0.32 Lease hold renovation : Owned 11.40 3.58 1.93 13.05 7.56 1.38 1.82 7.12 5.93 3.84 Plant and equipment : Lease out 2.80 – – 2.80 2.16 – – 2.16 0.64 0.64 Computers : Owned 44.71 12.99 – 57.70 37.10 3.84 – 40.94 16.76 7.61
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Corporate Overview Statutory Reports Financial Statements L&T Finance 479 Notes forming part of standalone financial statements (` in crore) Assets Gross carrying value*** Accumulated depreciation*** Net carrying value*** As at April 01, 2023 Additions Disposals/ Adjust- ment As at March 31, 2024 As at April 01, 2023 For the Year Disposals/ Adjust- ment As at March 31, 2024 As at March 31, 2024 As at March 31, 2023 Furniture and fixtures** Owned 14.86 2.47 5.59 11.74 8.01 1.61 2.70 6.92 4.82 6.85 Leased out 4.74 – – 4.74 4.06 – – 4.06 0.68 0.68 Sub total – Furniture and fixtures 19.60 2.47 5.59 16.48 12.07 1.61 2.70 10.98 5.50 7.53 Office equipment**# Owned 28.85 8.62 8.80 28.67 13.52 5.40 2.24 16.68 11.99 15.33 Leased out 0.01 – – 0.01 – – – – 0.01 0.01 Sub total – Office equipment 28.86 8.62 8.80 28.68 13.52 5.40 2.24 16.68 12.00 15.34 Vehicles Owned 13.67 10.11 2.13 21.65 4.07 4.34 1.46 6.95 14.70 9.60 Leased out 0.22 – – 0.22 0.14 – – 0.14 0.08 0.08 Sub total – Vehicles 13.89 10.11 2.13 21.87 4.21 4.34 1.46 7.09 14.78 9.68 Total 121.64 37.77 18.45 140.96 76.68 16.58 8.22 85.04 55.92 44.96 Note: *The tittle deed of the immovable property acquired under the scheme of amalgamation, is held in the name of erstwhile L&T Finance Limited which was merged with the Company with effect from 01 April, 2016, also the tittle deed holder is not a promoter, director or related party of the company. ** Gross Value of furniture & fixture amounting to ₹ 2.39 Crore transferred to office equipment. # Gross Value of office equipment amounting to ₹ 9.65 Crore transferred to Specialised Software. ***The Company has not revalued its property plant and equipment during the year and hence there is no movement for revaluation shown separately. 10 (a) Other intangible assets and Intangible assets under development (` in crore) Particulars Gross carrying value*** Accumulated Amortization*** Net carrying value*** As at April 01, 2024 Additions Disposals/ Adjust- ment As at March 31, 2025 As at April 01, 2024 For the Year Disposals/ Adjust- ment As at March 31, 2025 As at March 31, 2025 As at March 31, 2024 Other intangible assets Specialised software 455.30 96.22 – 551.52 359.17 78.53 – 437.70 113.82 96.13 Distribution and customer network rights 438.80 – – 438.80 438.80 – – 438.80 – – (a) Total other intangible assets 894.10 96.22 – 990.32 797.97 78.53 – 876.50 113.82 96.13 (b) Intangible assets under development 45.00 35.62
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Integrated Annual Report 2024-25480 Notes forming part of standalone financial statements (` in crore) Particulars Gross carrying value*** Accumulated Amortization*** Net carrying value*** As at April 01, 2023 Additions Disposals/ Adjust- ment As at March 31, 2024 As at April 01, 2023 For the Year Disposals/ Adjust- ment As at March 31, 2024 As at March 31, 2024 As at March 31, 2023 Other intangible assets Specialised software# 395.58 50.07 (9.65) 455.30 280.21 78.33 (0.63) 359.17 96.13 115.37 Distribution and customer network rights (refer footnote) 438.80 – – 438.80 438.80 – – 438.80 – – (a) Total other intangible assets 834.38 50.07 (9.65) 894.10 719.01 78.33 (0.63) 797.97 96.13 115.37 (b) Intangible assets under development 35.62 4.81 ***The Company has not revalued its property plant and equipment during the year and hence there is no movement for revaluation shown separately. # Gross Value of office equipment amounting to ₹ 9.65 Crore transferred to Specialised Software. 10(b) Intangible assets under development (i) Schdedule of ageing of Intangible assets under development as at March 31, 2025* (` in crore) Particulars Amount in Intangible asset under development for a period of Total Less than 1 year 1-2 years 2-3 years More than 3 years Projects in progress 45.00 – – – 45.00 Projects temporarily suspended – – – – – Total 45.00 – – – 45.00 (ii) Schedule of Ageing of completion of Intangible assets under development as at March 31, 2024* (` in crore) Particulars Amount in Intangible asset under development for a period of TotalLess than 1 year 1-2 years 2-3 years More than 3 years Projects in progress 35.62 – – – 35.62 Projects temporarily suspended – – – – – Total 35.62 – – – 35.62 * Above Intangible asset under development is not overdue or has not exceeded its cost compared to its original plan. 11 Other non-financials assets (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 Prepaid expenses 53.36 33.21 Amount paid under protest 32.85 31.55 Assets acquired in settlement of claims / loans (Net) 438.48 413.60 Other advances 106.81 45.84 Total other non-financials Assets 631.50 524.20
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Corporate Overview Statutory Reports Financial Statements L&T Finance 481 Notes forming part of standalone financial statements 12 Payables (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 (i) Trade payables (refer note 12(iii)) Micro enterprises and small enterprises (refer note 41) 3.76 – Due to others 1,229.95 1,086.98 Due to related parties (refer note 32) 134.09 132.83 Total trade payables (i) 1,367.80 1,219.81 (ii) Other payables Micro enterprises and small enterprises – – Due to others – – Due to related parties – – Total other payables (ii) – – Total payables (i+ii) 1,367.80 1,219.81 (iii) Trade Payables ageing schedule (` in crore) Particulars Outstanding as on March 31, 2025 * TotalUnbilled Less than 1 year 1-2 years 2-3 years More than 3 years (i) MSME – 3.76 – – – 3.76 (ii) Others – 22.73 1.43 – – 24.16 (iii) Disputed Dues – MSME – – – – – – (iv) Disputed Dues – Others – – – – – – (v) Bill Raised But not paid – 67.92 – – – 67.92 (vi) Undue Bills 1,271.96 – – – – 1,271.96 Total 1,271.96 94.41 1.43 – – 1,367.80 (` in crore) Particulars Outstanding as on March 31, 2024 * TotalUnbilled Less than 1 year 1-2 years 2-3 years More than 3 years (i) MSME – – – – – – (ii) Others – 23.48 – – – 23.48 (iii) Disputed Dues – MSME – – – – – – (iv) Disputed Dues – Others – – – – – – (v) Bill Raised But not paid – 49.80 – – – 49.80 (vi) Undue Bills 1,146.53 – – – – 1,146.53 Total 1,146.53 73.28 – – – 1,219.81 * The above ageing is preapared on the basis of date of transaction.
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Integrated Annual Report 2024-25482 Notes forming part of standalone financial statements 13 Debt Securities (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 (A) (i) At amortised cost – Redeemable non convertible debentures (refer note 13 (a)) 22,781.30 25,887.73 – Commercial papers (net) (refer note 13 (b)) 6,073.09 3,681.72 Total debt securities at amortised cost (i) 28,854.39 29,569.45 Total debt securities (A) 28,854.39 29,569.45 (B) (I) Debt securities in India (i) At amortised cost 28,854.39 29,569.45 (ii) At fair value through profit or loss – – (iii) Designated at fair value through profit or loss – – Total debt securities in India (I = i+ii+iii) 28,854.39 29,569.45 (II) Debt securities outside India (i) At amortised cost – – (ii) At fair value through profit or loss – – (iii) Designated at fair value through profit or loss – – Total debt securities in outside India (II = i+ii+iii) – – Total debt securities (B) = (I)+(II) 28,854.39 29,569.45 13(a) Secured redeemable non convertible debentures Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series III option 1 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 – 79.01 8.80% 15–04–2024 Redeemable at par at the end of 1827 days from the date of allotment Series III option 2 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 – 202.05 9.00% 15–04–2024 Redeemable at par at the end of 1827 days from the date of allotment Series IV option 1 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 – 1.56 8.48% 15–04–2024 Redeemable at par at the end of 1827 days from the date of allotment Series IV option 2 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 – 21.99 8.66% 15–04–2024 Redeemable at par at the end of 1827 days from the date of allotment Series V option 1 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 – 0.35 8.81% 15–04–2024 Redeemable at par at the end of 1827 days from the date of allotment Series V option 2 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 – 28.14 9.01% 15–04–2024 Redeemable at par at the end of 1827 days from the date of allotment Sr C FY 17–18 ₹ 25 lakh each 04–05–2017 – 134.19 8.08% 03–05–2024 Redeemable at par at the end of 2556 days from the date of allotment
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Corporate Overview Statutory Reports Financial Statements L&T Finance 483 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series H FY 2020–21 ₹ 10 lakh each 10–03–2021 – 50.19 6.45% 10–05–2024 Redeemable at par at the end of 1157 days from the date of allotment Reissuance – Series A FY 2021–22 ₹ 10 lakh each 30–04–2021 – 301.21 6.45% 10–05–2024 Redeemable at par at the end of 1106 days from the date of allotment Reissuance – Series C FY 2021–22 ₹ 10 lakh each 27–05–2021 – 200.86 6.45% 10–05–2024 Redeemable at par at the end of 1079 days from the date of allotment Sr E FY 17–18 ₹ 25 lakh each 16–05–2017 – 42.83 8.08% 16–05–2024 Redeemable at par at the end of 2557 days from the date of allotment Sr G FY18 Opt 1 ₹ 25 lakh each 31–05–2017 – 37.36 8.07% 31–05–2024 Redeemable at par at the end of 2557 days from the date of allotment Sr A FY15 Op 3 ₹ 25 lakh each 10–06–2014 – 102.42 9.70% 10–06–2024 Redeemable at par at the end of 3653 days from the date of allotment Sr H FY18 Opt 2 ₹ 25 lakh each 08–06–2017 – 106.58 8.08% 10–06–2024 Redeemable at par at the end of 2559 days from the date of allotment Sr I FY18 Opt 2 ₹ 25 lakh each 14–06–2017 – 26.61 8.07% 14–06–2024 Redeemable at par at the end of 2557 days from the date of allotment Sr J FY18 Opt 2 ₹ 25 lakh each 16–06–2017 – 53.20 8.07% 14–06–2024 Redeemable at par at the end of 2555 days from the date of allotment SrC FY19 Opt II ₹ 10 lakh each 26–06–2018 – 265.32 9.30% 26–06–2024 Redeemable at par at the end of 2192 days from the date of allotment Series A FY 2022–23 ₹ 10 lakh each 01–07–2022 – 184.92 7.55% 01–07–2024 Redeemable at par at the end of 731 days from the date of allotment Sr D FY 18–19 ₹ 10 lakh each 06–07–2018 – 170.97 9.30% 05–07–2024 Redeemable at par at the end of 2191 days from the date of allotment Series E FY 2020–21 opt 2 ₹ 10 lakh each 13–07–2020 – 258.73 7.90% 12–07–2024 Redeemable at par at the end of 1460 days from the date of allotment Series C FY 2022–23 – MLD ₹ 10 lakh each 27–07–2022 – 229.36 7.20% 27–08–2024 Redeemable at par at the end of 762 days from the date of allotment Reissuance–Series E FY 2022–23 MLD ₹ 10 lakh each 08–08–2022 – 80.95 7.20% 27–08–2024 Redeemable at par at the end of 750 days from the date of allotment Reissuance–Series F FY 2022–23 MLD ₹ 10 lakh each 19–08–2022 – 133.79 7.20% 27–08–2024 Redeemable at par at the end of 739 days from the date of allotment
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Integrated Annual Report 2024-25484 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series F FY 2021–22 option 2 ₹ 10 lakh each 31–08–2021 – 517.23 5.90% 30–08–2024 Redeemable at par at the end of 1095 days from the date of allotment Series K FY 2020–21 opt 2 ₹ 10 lakh each 16–09–2020 – 181.65 7.15% 16–09–2024 Redeemable at par at the end of 1461 days from the date of allotment Series D FY 2020–21 ₹ 10 lakh each 03–11–2020 – 307.77 6.55% 01–11–2024 Redeemable at par at the end of 1459 days from the date of allotment Series M FY 2020–21 ₹ 10 lakh each 03–11–2020 – 205.34 6.75% 01–11–2024 Redeemable at par at the end of 1459 days from the date of allotment Series J FY 2021–22 ₹ 10 lakh each 16–11–2021 – 66.52 6.25% 15–11–2024 Redeemable at par at the end of 1095 days from the date of allotment Series J FY 2021–22 ₹ 10 lakh each 16–11–2021 – 153.50 6.25% 15–11–2024 Redeemable at par at the end of 1095 days from the date of allotment Series A FY 2017–18 ₹ 10 lakh each 29–06–2017 – 684.95 7.59% 18–11–2024 Redeemable at par at the end of 2699 days from the date of allotment Series K FY 2021–22 option 1 ₹ 10 lakh each 03–12–2021 – 153.06 6.25% 03–12–2024 Redeemable at par at the end of 1096 days from the date of allotment Series IV option 1 FY 2019–20 (Public issue–2) 1,000.00 23–12–2019 – 23.73 8.45% 23–12–2024 Redeemable at par at the end of 1827 days from the date of allotment Series IV option 2 FY 2019–20 (Public issue–2) 1,000.00 23–12–2019 – 332.59 8.60% 23–12–2024 Redeemable at par at the end of 1827 days from the date of allotment Series V option 1 FY 2019–20 (Public issue–2) 1,000.00 23–12–2019 – 0.79 8.15% 23–12–2024 Redeemable at par at the end of 1827 days from the date of allotment Series V option 2 FY 2019–20 (Public issue–2) 1,000.00 23–12–2019 – 75.33 8.29% 23–12–2024 Redeemable at par at the end of 1827 days from the date of allotment Series K FY 2022–23 – MLD ₹ 10 lakh each 24–11–2022 – 176.49 7.75% 27–12–2024 Redeemable at par at the end of 764 days from the date of allotment "Reissuance – Series L FY 2022–23 – MLD option 2 (Original Issuance Series K FY 2022–23_MLD)" ₹ 10 lakh each 07–12–2022 – 115.07 7.75% 27–12–2024 Redeemable at par at the end of 751 days from the date of allotment Series L FY 2021–22 ₹ 10 lakh each 23–12–2021 – 305.04 6.15% 23–01–2025 Redeemable at par at the end of 1127 days from the date of allotment Sr B FY15 Opt I ₹ 25 lakh each 28–01–2015 – 101.43 8.49% 28–01–2025 Redeemable at par at the end of 3653 days from the date of allotment
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Corporate Overview Statutory Reports Financial Statements L&T Finance 485 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series B FY 2019–20 opt 1 ₹ 10 lakh each 28–01–2020 – 65.96 8.45% 17–02–2025 Redeemable at par at the end of 1847 days from the date of allotment Reissuance – Series B1 FY 2019–20 opt 1 (Original issuance series B FY 2019–20 opt 1) ₹ 10 lakh each 05–02–2020 – 35.49 8.45% 17–02–2025 Redeemable at par at the end of 1839 days from the date of allotment MLD SR D 19–20 ₹ 10 lakh each 31–01–2020 – 22.94 8.17% 28–02–2025 Redeemable at par at the end of 1855 days from the date of allotment Series J FY 2022–23 ₹ 10 lakh each 17–11–2022 – 72.17 7.88% 11–03–2025 Redeemable at par at the end of 845 days from the date of allotment Series O FY 2022–23 – MLD ₹ 1 lakh each 06–01–2023 – 78.90 7.69% 21–03–2025 Redeemable at par at the end of 805 days from the date of allotment MLD SR E 19–20 ₹ 10 lakh each 25–02–2020 – 232.62 8.70% 25–03–2025 Redeemable at par at the end of 1855 days from the date of allotment Series J FY 2015–16 opt 3 ₹ 25 lakh each 19–05–2015 47.91 47.91 8.84% 19–05–2025 Redeemable at par at the end of 3653 days from the date of allotment Series C FY 2015–16 opt 5 ₹ 25 lakh each 26–05–2015 32.26 32.27 8.90% 26–05–2025 Redeemable at par at the end of 3653 days from the date of allotment Series M FY 2015–16 opt 2 ₹ 25 lakh each 26–05–2015 21.50 21.50 8.85% 26–05–2025 Redeemable at par at the end of 3653 days from the date of allotment Series D FY 2015–16 opt 5 ₹ 25 lakh each 05–06–2015 26.83 26.83 8.90% 05–06–2025 Redeemable at par at the end of 3653 days from the date of allotment Series R FY 2015–16 ₹ 25 lakh each 05–06–2015 53.63 53.63 8.84% 05–06–2025 Redeemable at par at the end of 3653 days from the date of allotment Series M FY 2022–23 – MLD ₹ 10 lakh each 20–12–2022 202.72 188.11 7.73% 20–06–2025 Redeemable at par at the end of 913 days from the date of allotment Series B FY 2020–21 ₹ 10 lakh each 09–07–2020 294.89 294.66 7.85% 09–07–2025 Redeemable at par at the end of 1826 days from the date of allotment Series D FY 2020–21 ₹ 10 lakh each 10–07–2020 364.36 364.20 7.75% 10–07–2025 Redeemable at par at the end of 1826 days from the date of allotment Series I FY 2015–16 opt 4 ₹ 25 lakh each 17–07–2015 10.63 10.63 8.95% 17–07–2025 Redeemable at par at the end of 3653 days from the date of allotment Series E FY 2018–19 ₹ 10 lakh each 23–07–2018 15.94 15.94 9.05% 23–07–2025 Redeemable at par at the end of 2557 days from the date of allotment
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Integrated Annual Report 2024-25486 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series E FY 2020–21 opt 1 ₹ 10 lakh each 13–07–2020 528.40 528.03 7.95% 28–07–2025 Redeemable at par at the end of 1841 days from the date of allotment Series B FY 2022–23 Option 1 ₹ 10 lakh each 15–07–2022 211.03 211.02 7.75% 14–08–2025 Redeemable at par at the end of 1126 days from the date of allotment Series B FY 2022–23 Option 2 ₹ 10 lakh each 15–07–2022 367.44 340.98 7.74% 15–09–2025 Redeemable at par at the end of 1158 days from the date of allotment Series D FY 2022–23 (Reissuance of Series B FY 2022–23 opt 2) ₹ 10 lakh each 02–08–2022 268.10 249.01 7.87% 15–09–2025 Redeemable at par at the end of 1140 days from the date of allotment Series M FY 2021–22 ₹ 10 lakh each 01–02–2022 40.42 40.42 6.45% 26–09–2025 Redeemable at par at the end of 1333 days from the date of allotment Series M FY 2021–22 ₹ 10 lakh each 01–02–2022 25.26 25.26 6.45% 26–09–2025 Redeemable at par at the end of 1333 days from the date of allotment Series M FY 2021–22 ₹ 10 lakh each 01–02–2022 505.21 505.29 6.45% 26–09–2025 Redeemable at par at the end of 1333 days from the date of allotment Series H FY 2022–23 ₹ 10 lakh each 19–10–2022 517.70 517.49 7.95% 31–10–2025 Redeemable at par at the end of 1108 days from the date of allotment Series I FY 2022–23 – MLD ₹ 10 lakh each 09–11–2022 204.77 189.88 7.81% 10–11–2025 Redeemable at par at the end of 1097 days from the date of allotment Series G FY 2022–23 ₹ 10 lakh each 29–08–2022 605.68 605.67 7.53% 28–11–2025 Redeemable at par at the end of 1187 days from the date of allotment Sr C FY16 Opt 3 ₹ 25 lakh each 04–12–2015 15.41 15.42 8.55% 04–12–2025 Redeemable at par at the end of 3653 days from the date of allotment Sr D FY16 Opt 3 ₹ 25 lakh each 07–01–2016 156.03 156.01 8.63% 07–01–2026 Redeemable at par at the end of 3653 days from the date of allotment Series AJ FY 2015–16 opt 2 ₹ 25 lakh each 08–02–2016 52.62 52.64 8.75% 06–02–2026 Redeemable at par at the end of 3651 days from the date of allotment Series L FY 2022–23 – MLD option 1 ₹ 10 lakh each 07–12–2022 357.36 331.22 7.84% 10–02–2026 Redeemable at par at the end of 1161 days from the date of allotment Series P FY 2022–23 (Reissuance of Series L FY 2022–23 opt 1) ₹ 10 lakh each 24–01–2023 23.84 22.12 7.84% 10–02–2026 Redeemable at par at the end of 1113 days from the date of allotment Sr E FY16 Opt 3 ₹ 25 lakh each 24–02–2016 136.07 135.93 8.73% 24–02–2026 Redeemable at par at the end of 3653 days from the date of allotment
Page 490
Corporate Overview Statutory Reports Financial Statements L&T Finance 487 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series N FY 2022–23 ₹ 10 lakh each 29–12–2022 393.27 393.29 7.95% 27–02–2026 Redeemable at par at the end of 1156 days from the date of allotment Series N FY 2022–23 ₹ 10 lakh each 29–12–2022 510.13 510.21 7.95% 27–02–2026 Redeemable at par at the end of 1156 days from the date of allotment Sr G FY16 OPT 3 ₹ 25 lakh each 22–03–2016 90.12 90.10 8.75% 20–03–2026 Redeemable at par at the end of 3650 days from the date of allotment Sr H FY 15–16 ₹ 25 lakh each 29–03–2016 325.91 325.45 8.72% 27–03–2026 Redeemable at par at the end of 3650 days from the date of allotment Series R FY 2022–23 Option 1 ₹ 1 lakh each 31–03–2023 162.51 162.50 8.33% 30–03–2026 Redeemable at par at the end of 1095 days from the date of allotment Series B FY 2016–17 opt 3 ₹ 25 lakh each 20–04–2016 5.41 5.41 8.65% 20–04–2026 Redeemable at par at the end of 3652 days from the date of allotment Series B FY 2016–17 opt 3 ₹ 25 lakh each 06–05–2016 21.57 21.55 8.67% 06–05–2026 Redeemable at par at the end of 3652 days from the date of allotment Series B FY 2019–20 ₹ 10 lakh each 28–05–2019 913.12 913.15 8.80% 28–05–2026 Redeemable at par at the end of 2557 days from the date of allotment Sr D FY17 OPT 3 ₹ 25 lakh each 10–06–2016 10.71 10.70 8.75% 10–06–2026 Redeemable at par at the end of 3652 days from the date of allotment Sr E FY17 OPT 2 ₹ 25 lakh each 17–06–2016 53.46 53.44 8.80% 17–06–2026 Redeemable at par at the end of 3652 days from the date of allotment Sr F FY17 OPT 2 ₹ 25 lakh each 23–06–2016 112.09 112.11 8.80% 23–06–2026 Redeemable at par at the end of 3652 days from the date of allotment Sr G FY 16–17 ₹ 25 lakh each 13–07–2016 15.94 15.95 8.77% 13–07–2026 Redeemable at par at the end of 3652 days from the date of allotment Series C FY 2019–20 ₹ 10 lakh each 31–07–2019 15.86 15.85 8.55% 31–07–2026 Redeemable at par at the end of 2557 days from the date of allotment Series B FY 2023–24 ₹ 1 lakh each 05–06–2023 26.63 26.63 7.91% 25–09–2026 Redeemable at par at the end of 1208 days from the date of allotment Series B FY 2023–24 ₹ 1 lakh each 05–06–2023 505.88 505.90 7.91% 25–09–2026 Redeemable at par at the end of 1208 days from the date of allotment Sr J FY 16–17 ₹ 25 lakh each 28–09–2016 75.81 75.84 8.43% 28–09–2026 Redeemable at par at the end of 3652 days from the date of allotment
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Integrated Annual Report 2024-25488 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Sr K FY17 OPT 1 ₹ 25 lakh each 03–10–2016 106.48 106.48 8.43% 01–10–2026 Redeemable at par at the end of 3650 days from the date of allotment Sr M FY17 OPT 2 ₹ 25 lakh each 13–10–2016 77.87 77.89 8.30% 13–10–2026 Redeemable at par at the end of 3652 days from the date of allotment Sr N FY 16–17 ₹ 25 lakh each 20–10–2016 134.76 134.80 8.30% 20–10–2026 Redeemable at par at the end of 3652 days from the date of allotment Series S FY 2016–17 ₹ 25 lakh each 25–10–2016 10.34 10.34 7.90% 23–10–2026 Redeemable at par at the end of 3650 days from the date of allotment Sr P FY 16–17 ₹ 25 lakh each 15–11–2016 25.76 25.76 8.15% 13–11–2026 Redeemable at par at the end of 3650 days from the date of allotment Series T FY 2016–17 ₹ 25 lakh each 16–11–2016 48.36 48.38 7.95% 16–11–2026 Redeemable at par at the end of 3652 days from the date of allotment Series VI option 1 FY 2019–20 (Public issue–2) 1,000.00 23–12–2019 25.53 25.49 8.50% 23–12–2026 Redeemable at par at the end of 2557 days from the date of allotment Series VI option 2 FY 2019–20 (Public issue–2) 1,000.00 23–12–2019 406.32 405.69 8.65% 23–12–2026 Redeemable at par at the end of 2557 days from the date of allotment Series F FY 2023–24 ₹ 1 lakh each 04–01–2024 509.62 509.65 8.15% 04–01–2027 Redeemable at par at the end of 1096 days from the date of allotment Series G FY 2023–24 (Reissuance of Series F FY 2023–24) ₹ 1 lakh each 18–01–2024 152.77 152.71 8.15% 04–01–2027 Redeemable at par at the end of 1082 days from the date of allotment Series “I” (FY 2024–25) Reissuance of SR F 2023–24 & SR G 2023–24 ₹ 1 lakh each 13–03–2025 163.62 – 8.15% 04–01–2027 Redeemable at par at the end of 662 days from the date of allotment SR C 19–20 ₹ 10 lakh each 08–01–2020 15.91 15.91 8.75% 08–01–2027 Redeemable at par at the end of 2557 days from the date of allotment Series “D” (FY 2024–25) ₹ 1 lakh each 05–09–2024 182.77 – 7.99% 25–03–2027 Redeemable at par at the end of 931 days from the date of allotment Series VI option 1 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 11.38 11.37 8.85% 15–04–2027 Redeemable at par at the end of 2922 days from the date of allotment Series VI option 2 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 381.48 380.92 9.05% 15–04–2027 Redeemable at par at the end of 2922 days from the date of allotment Series IV option 1 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 0.46 0.45 8.52% 15–04–2027 Redeemable at par at the end of 2922 days from the date of allotment
Page 492
Corporate Overview Statutory Reports Financial Statements L&T Finance 489 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series VII option 2 FY 2019–20 (Public issue–1) 1,000.00 15–04–2019 17.50 17.47 8.70% 15–04–2027 Redeemable at par at the end of 2922 days from the date of allotment Series J FY 2023–24 ₹ 1 lakh each 15–03–2024 301.05 301.14 8.24% 16–06–2027 Redeemable at par at the end of 1188 days from the date of allotment Series A FY 2024–25 (Reissuance of Series J FY 2023–24) ₹ 1 lakh each 30–05–2024 100.32 – 8.24% 16–06–2027 Redeemable at par at the end of 1112 days from the date of allotment Series A FY 2024–25 (Reissuance of Series J FY 2023–24) ₹ 1 lakh each 30–05–2024 200.96 – 8.24% 16–06–2027 Redeemable at par at the end of 1112 days from the date of allotment Series E FY 2024–25 Opt 1 (Reissuance of Series J FY 2023–24 & Series A FY 2024–25) ₹ 1 lakh each 04–10–2024 100.90 – 8.24% 16–06–2027 Redeemable at par at the end of 985 days from the date of allotment Series E FY 2024–25 Opt 1 (Reissuance of Series J FY 2023–24 & Series A FY 2024–25) ₹ 1 lakh each 04–10–2024 50.30 – 8.24% 16–06–2027 Redeemable at par at the end of 985 days from the date of allotment Series “C” (FY 2024–25) ₹ 1 lakh each 28–06–2024 300.29 – 8.16% 30–09–2027 Redeemable at par at the end of 1189 days from the date of allotment Series E FY 2024–25 Opt 2 (Reissuance of Series C FY 2024–25) ₹ 1 lakh each 04–10–2024 53.33 – 8.16% 30–09–2027 Redeemable at par at the end of 1091 days from the date of allotment Series E FY 2024–25 Opt 2 (Reissuance of Series C FY 2024–25) ₹ 1 lakh each 04–10–2024 53.31 – 8.16% 30–09–2027 Redeemable at par at the end of 1091 days from the date of allotment Series E FY 2024–25 Opt 2 (Reissuance of Series C FY 2024–25) ₹ 1 lakh each 04–10–2024 53.13 – 8.16% 30–09–2027 Redeemable at par at the end of 1091 days from the date of allotment Series “G” (FY 2024–25) ₹ 1 lakh each 13–12–2024 511.25 – 7.75% 13–12–2027 Redeemable at par at the end of 1095 days from the date of allotment Series R FY 2022–23 ₹ 1 lakh each 01–03–2023 201.38 201.38 8.15% 01–03–2028 Redeemable at par at the end of 1827 days from the date of allotment Series R FY 2022–23 ₹ 1 lakh each 01–03–2023 143.44 143.43 8.15% 01–03–2028 Redeemable at par at the end of 1827 days from the date of allotment Series S FY 2022–23 opt 2 (Reissuance of Series R FY 2022–23 option 2) ₹ 1 lakh each 31–03–2023 281.42 281.24 8.15% 01–03–2028 Redeemable at par at the end of 1797 days from the date of allotment Series A FY 2023–24 Opt I ₹ 1 lakh each 26–05–2023 151.48 151.47 7.90% 26–05–2028 Redeemable at par at the end of 1827 days from the date of allotment Series A FY 2011–12 ₹ 5.71 lakh each 18–10–2011 291.33 364.15 9.70% 18–10–2028 Redeemable at par in 7 installments
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Integrated Annual Report 2024-25490 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series V option 1 FY 2018–19 (Public issue–1) 1,000.00 13–03–2019 8.01 8.00 9.20% 13–03–2029 Redeemable at par at the end of 3653 days from the date of allotment Series V option 1 FY 2018–19 (Public issue–1) 1,000.00 13–03–2019 110.92 110.79 9.35% 13–03–2029 Redeemable at par at the end of 3653 days from the date of allotment Series VI option 1 FY 2018–19 (Public issue–1) 1,000.00 13–03–2019 0.70 0.70 8.84% 13–03–2029 Redeemable at par at the end of 3653 days from the date of allotment Series VI option 2 FY 2018–19 (Public issue–1) 1,000.00 13–03–2019 101.73 101.61 8.98% 13–03–2029 Redeemable at par at the end of 3653 days from the date of allotment Series H FY 2023–24 ₹ 1 lakh each 29–01–2024 207.74 207.76 8.13% 23–03–2029 Redeemable at par at the end of 1880 days from the date of allotment Series I FY 2023–24 (Reissuance of Series H FY 2023–24) ₹ 1 lakh each 21–02–2024 223.90 223.91 8.13% 23–03–2029 Redeemable at par at the end of 1857 days from the date of allotment NCDSR A(19–20) ₹ 10 lakh each 24–09–2019 701.29 701.29 8.42% 24–09–2029 Redeemable at par at the end of 3653 days from the date of allotment NCDSR B(19–20) ₹ 10 lakh each 25–10–2019 12.43 12.42 8.80% 25–10–2029 Redeemable at par at the end of 3653 days from the date of allotment Series “F” (FY 2024–25) ₹ 1 lakh each 28–10–2024 309.52 – 7.80% 28–12–2029 Redeemable at par at the end of 1887 days from the date of allotment Sr B FY15 Opt 2 ₹ 25 lakh each 28–01–2015 101.34 101.30 8.51% 28–01–2030 Redeemable at par at the end of 5479 days from the date of allotment Series B FY 2019–20 opt 2 ₹ 10 lakh each 28–01–2020 55.78 55.79 8.55% 28–01–2030 Redeemable at par at the end of 3653 days from the date of allotment Series B2 FY 2019–20 opt 2 (Reissuance of Series B FY 2019–20 opt 2) ₹ 10 lakh each 11–02–2020 223.04 223.04 8.55% 28–01–2030 Redeemable at par at the end of 3639 days from the date of allotment Series “H” (FY 2024–25) ₹ 1 lakh each 13–02–2025 363.12 – 7.80% 29–03–2030 Redeemable at par at the end of 1870 days from the date of allotment Series B FY 2020–21 ₹ 10 lakh each 30–06–2020 126.46 126.45 8.10% 28–06–2030 Redeemable at par at the end of 3650 days from the date of allotment Series E FY 2020–21 opt 3 (Reissuance of Series B FY 2020–21) ₹ 10 lakh each 13–07–2020 267.01 267.09 8.10% 28–06–2030 Redeemable at par at the end of 3637 days from the date of allotment Series J FY 2020–21 opt 2 ₹ 10 lakh each 09–09–2020 104.06 104.03 7.66% 09–09–2030 Redeemable at par at the end of 3652 days from the date of allotment
Page 494
Corporate Overview Statutory Reports Financial Statements L&T Finance 491 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series K FY 2020–21 opt 1 (Reissuance of Series J FY 2020–21 opt 2) ₹ 10 lakh each 16–09–2020 52.20 52.21 7.66% 09–09–2030 Redeemable at par at the end of 3645 days from the date of allotment Series N FY 2020–21 ₹ 10 lakh each 30–12–2020 1,534.91 1,529.04 7.62% 30–12–2030 Redeemable at par at the end of 3652 days from the date of allotment Sr D FY16 Opt 4 ₹ 25 lakh each 07–01–2016 15.29 15.29 8.63% 07–01–2031 Redeemable at par at the end of 5479 days from the date of allotment Sr E FY16 Opt 4 ₹ 25 lakh each 24–02–2016 5.02 5.02 8.73% 24–02–2031 Redeemable at par at the end of 5479 days from the date of allotment Series B FY 2021–22 ₹ 10 lakh each 19–05–2021 1,064.27 1,064.30 7.40% 19–05–2031 Redeemable at par in 5 installments Sr K FY17 OPT 2 ₹ 25 lakh each 03–10–2016 26.02 26.02 8.43% 03–10–2031 Redeemable at par at the end of 5478 days from the date of allotment NCD SRC STRPP 1 ₹ 2 lakh each 21–10–2020 26.93 26.94 8.10% 21–10–2031 Redeemable at par at the end of 4017 days from the date of allotment NCD SRD STRPP 1 ₹ 2 lakh each 25–11–2020 10.28 10.28 7.95% 25–11–2031 Redeemable at par at the end of 4017 days from the date of allotment Sr G FY18 Opt 2 ₹ 25 lakh each 31–05–2017 112.11 112.10 8.20% 31–05–2032 Redeemable at par at the end of 5479 days from the date of allotment NCD SRC STRPP 2 ₹ 2 lakh each 21–10–2020 26.93 26.94 8.10% 21–10–2032 Redeemable at par at the end of 4383 days from the date of allotment NCD SRD STRPP 2 ₹ 2 lakh each 25–11–2020 10.28 10.28 7.95% 25–11–2032 Redeemable at par at the end of 4383 days from the date of allotment Series Q FY 2022–23 ₹ 1 lakh each 14–02–2023 277.61 277.64 8.05% 14–02–2033 Redeemable at par at the end of 3653 days from the date of allotment Series A FY 2023–24 Opt II ₹ 1 lakh each 26–05–2023 266.45 266.44 7.85% 26–05–2033 Redeemable at par at the end of 3653 days from the date of allotment Series C FY 2023–24 (Reissuance of Series A FY 2023–24) ₹ 1 lakh each 13–06–2023 117.52 117.55 7.85% 26–05–2033 Redeemable at par at the end of 3635 days from the date of allotment Series E FY 2023–24 (Reissuance of Series A FY 2023–24) ₹ 1 lakh each 27–09–2023 79.66 79.62 7.85% 26–05–2033 Redeemable at par at the end of 3529 days from the date of allotment Series D FY 2023–24 ₹ 1 lakh each 13–09–2023 1,669.26 1,669.42 7.90% 13–09–2033 Redeemable at par in 4 installments NCD SRC STRPP 3 ₹ 2 lakh each 21–10–2020 26.93 26.94 8.10% 21–10–2033 Redeemable at par at the end of 4748 days from the date of allotment
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Integrated Annual Report 2024-25492 Notes forming part of standalone financial statements Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms NCD SRD STRPP 3 ₹ 2 lakh each 25–11–2020 10.28 10.28 7.95% 25–11–2033 Redeemable at par at the end of 4748 days from the date of allotment NCDSR I (18–19) ₹ 10 lakh each 20–02–2019 20.20 20.21 9.22% 20–02–2034 Redeemable at par at the end of 5479 days from the date of allotment Series “B” (FY 2024–25) ₹ 1 lakh each 13–09–2024 521.41 – 7.90% 08–09–2034 Redeemable at par in 4 installments Series “B” (FY 2024–25) ₹ 1 lakh each 13–12–2024 511.80 – 7.90% 08–09–2034 Redeemable at par in 4 installments NCD SRC STRPP 4 ₹ 2 lakh each 21–10–2020 26.93 26.94 8.10% 20–10–2034 Redeemable at par at the end of 5112 days from the date of allotment NCD SRD STRPP 4 ₹ 2 lakh each 25–11–2020 10.28 10.28 7.95% 24–11–2034 Redeemable at par at the end of 5112 days from the date of allotment NCD SRC STRPP 5 ₹ 2 lakh each 21–10–2020 26.93 26.94 8.10% 19–10–2035 Redeemable at par at the end of 5476 days from the date of allotment NCD SRD STRPP 5 ₹ 2 lakh each 25–11–2020 10.28 10.28 7.95% 23–11–2035 Redeemable at par at the end of 5476 days from the date of allotment Sr D FY16 Opt 5 ₹ 25 lakh each 07–01–2016 10.19 10.19 8.63% 07–01–2036 Redeemable at par at the end of 7305 days from the date of allotment Sr E FY16 Opt 5 ₹ 25 lakh each 24–02–2016 5.01 5.01 8.73% 22–02–2036 Redeemable at par at the end of 7303 days from the date of allotment Total 13(a) 22,781.30 25,887.73 Nature of Security : The Debentures are secured by way of first charge, having pari passu right, as the case may be, on the company’s specified immovable properties and specified term loan. Secured redeemable non convertible debentures public issue : The Company has utilised fund raised through public issue for the purpose of onward lending, financing, refinancing the existing indebtedness of the Company (payment of interest and/or repayment/prepayment of principal of borrowings) and general corporate purpose. 13(b) Commercial papers (net) Repayment Term Tenure Interest Range Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Bullet Up to 1 Year 7.01%-8.00% 6,073.09 1,171.22 8.01%-9.00% – 2,510.50 Total 13(b) 6,073.09 3,681.72
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Corporate Overview Statutory Reports Financial Statements L&T Finance 493 Notes forming part of standalone financial statements 14 Borrowings (other than debt securities) (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 (A) (i) At amortised cost (a) Term loans (i) from banks (refer note 14 (a)) 26,648.82 20,303.86 (ii) from financial institutions (refer note 14 (b)) 2,723.37 4,048.52 (b) External commercial borrowings (refer note 14 (c)) 7,544.01 2,105.51 (c) Loan repayable on demand (i) from banks (refer note 14 (d)) 22,451.83 16,615.58 (d) Collateralized borrowing and lending obligation (refer note 14 (e)) 399.93 399.18 (e) Associated liability related to securitisation transactions (refer note 14 (f)) 1,791.26 957.82 Total borrowings other than debt securities at amortised cost (i) 61,559.22 44,430.47 Total borrowings (other than debt securities) (A) 61,559.22 44,430.47 (B) (I) Borrowings (other than debt securities) in India (i) At amortised cost 54,015.21 42,324.96 (ii) At fair value through profit or loss – – (iii) Designated at fair value through profit or loss – – Total borrowings (other than debt securities) in India (I = i+ii+iii) 54,015.21 42,324.96 (II) Borrowings (other than debt securities) outside India (i) At amortised Cost 7,544.01 2,105.51 (ii) At fair value through profit or loss – – (iii) Designated at fair value through profit or loss – – Total borrowings (other than debt securities) in outside India (II = i+ii+iii) 7,544.01 2,105.51 Total borrowings (other than debt securities) (B) = (I)+(II) 61,559.22 44,430.47 14(a) Term loans from bank : Secured Repayment Term Interest Range Residual Tenure as on the Balance sheet date Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Quarterly Upto 7.00% Upto 1 Yr 2,039.35 155.79 1 To 3 Yrs 4,303.62 2,342.10 3 – 5 Years 199.81 – 7.01%–8.00% Upto 1 Yr 79.49 1,200.21 1 To 3 Yrs 5,091.09 4,072.16 3 – 5 Years 1,799.98 –
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Integrated Annual Report 2024-25494 Notes forming part of standalone financial statements Repayment Term Interest Range Residual Tenure as on the Balance sheet date Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Quarterly 8.01%–9.00% Upto 1 Yr 924.90 686.62 1 To 3 Yrs 274.85 1,515.60 3 – 5 Years – 374.80 Semi Annually Upto 7.00% Upto 1 Yr 333.69 560.71 1 To 3 Yrs 565.40 971.16 3 To 5 Yrs 202.50 400.00 7.01%–8.00% Upto 1 Yr 200.04 25.00 1 To 3 Yrs 4,604.78 3,319.50 3 To 5 Yrs 4,148.40 1,473.44 8.01%–9.00% 1 To 3 Yrs 952.88 600.14 3 To 5 Yrs – 1,334.02 Bullet Upto 7.00% Upto 1 Yr – 499.90 8.01%–9.00% 50.03 100.00 Upto 7.00% 1 – 3 Year – 190.00 7.01%–8.00% 500.00 – 8.01%–9.00% – 50.01 Annually Upto 7.00% Upto 1 Yr – 25.01 8.01%–9.00% 34.00 306.70 Upto 7.00% 1 To 3 Yrs 115.00 – 7.01%–8.00% 229.01 34.01 8.01%–9.00% 67.00 Total 26,648.84 20,303.86 Nature of Security : Term loan from bank is secured by hypothecation of specified term loan receivables. 14(b) Term loans from financial institutions : Secured Repayment Term Interest Range Residual Tenure as on the Balance sheet date Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Quarterly Upto 7.00% Upto 1 Yr 170.64 Upto 7.00% 1 – 3 Year 747.13 1,145.50 7.01%–8.00% 1 – 3 Year 1,155.09 1,577.90 8.01%–9.00% 3 – 5 Years 319.80 411.40 Semi Annually Upto 7.00% Upto 1 Yr – 743.08 8.01%–9.00% Above 5 years 501.34 – Total 2,723.37 4,048.52 Nature of Security : Term loan from financial institutions is secured by hypothecation of specified term loan receivables.
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Corporate Overview Statutory Reports Financial Statements L&T Finance 495 Notes forming part of standalone financial statements 14(c) External commercial borrowings : Secured Repayment Term Interest Range Residual Tenure as on the Balance sheet date Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Bullet 8.01%-9.00% Upto 1 Yr – 1,064.73 7.01%-8.00% 1 - 3 Year 5,688.93 411.51 Semi Annually 7.01%-8.00% 3 - 5 Years 1,019.97 417.78 8.01%-9.00% 3 - 5 Years 835.12 211.49 Total 7,544.01 2,105.51 Nature of Security : External commercial borrowings Loan is secured againt first charge on specific receivables pertaining to Farm Equipments. 14(d) Loan repayable on demand from bank : Secured Nature Repayment Term Residual Tenure as on the Balance sheet date Interest Range Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Working Capital Demand Loan Bullet Up to 1 Year 7.01%–8.00% 3,910.13 935.00 8.01%–9.00% 3,575.00 4,625.00 9.01%–10.00% 180.00 200.00 Line of Credit (LOC) Bullet Up to 1 Year Upto 7.00% – 23.26 7.01%–8.00% 2,500.25 115.83 Upto 7.00% 8,051.49 7,141.49 Cash Credit Bullet Upto 1 Year 7.01%–8.00% 239.97 – 9.01%–10.00% 244.95 – Total (A) 18,701.78 13,040.58 Nature of Security : Loan repayable on demand from bank is secured by hypothecation of specified term loan receivables. Loan repayable on demand : Unsecured Nature Repayment Term Residual Tenure as on the Balance sheet date Interest Range Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Working Capital Demand Loan Bullet Up to 1 Year 7.01%–8.00% 800.00 500.00 8.01%–9.00% 2,700.00 100.00 9.01%–10.00% 250.00 2,950.00 Cash Credit Bullet Up to 1 Year 8.01%–9.00% – 25.00 9.01%–10.00% 0.05 – Total (B) 3,750.05 3,575.00 Tota Loan repayable on demand (A+B) 22,451.83 16,615.58
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Integrated Annual Report 2024-25496 Notes forming part of standalone financial statements 14(e) Collateralized borrowing and lending obligation : Secured Nature Repayment Term Residual Tenure as on the Balance sheet date Interest Range Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Collateralized borrowing and lending obligation (TREPS) Bullet Up to 1 Year Upto 7.00% 399.93 99.80 7.01%-8.00% – 299.39 Total 399.93 399.18 Nature of Security : Collateralized borrowing and lending obligation (TREPS) is secured by government securities. 14(f) Associated liability related to securitisation transactions Nature Repayment Term Residual Tenure as on the Balance sheet date Interest Range Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Associated liability related to securitisation transactions Monthly 1 - 3 Year Upto 7.00% 317.46 229.66 3 - 5 Years Upto 7.00% 1,473.80 728.16 Total 1,791.26 957.82 Nature of Security : Associated liability related to securitisation transactions is secured against specific receivables pertaining to Farm Equipments. Note: The above outstanding disclosure are presented based on the residual tenure as on the balance sheet date for current and previous year. 15 Subordinated liabilities (unsecured) (` in crore) Particulars As at March 31, 2025 As at March 31, 2024 (A) (I) At amortised cost (a) Perpetual debt Instruments to the extent that do not qualify as equity (Refer note 15 (a)) 367.72 367.36 (b) Subordinate debt Instruments (Refer note 15 (b)) 1,465.57 2,173.59 Total subordinated liabilities (A) 1,833.29 2,540.95 (B) (I) Subordinated liabilities in India (i) At amortised cost 1,833.29 2,540.95 (ii) At fair value through profit or loss – – (iii) Designated at fair value through profit or loss – – Total subordinated liabilities in India (I = i+ii+iii) 1,833.29 2,540.95 (II) Subordinated liabilities outside India (i) At amortised cost – – (ii) At fair value through profit or loss – – (iii) Designated at fair value through profit or loss – – Total subordinated liabilities in outside India (II = i+ii+iii) – – Total subordinated liabilities (B) = (I)+(II) 1,833.29 2,540.95
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Corporate Overview Statutory Reports Financial Statements L&T Finance 497 Notes forming part of standalone financial statements 15(a) Unsecured redeemable non convertible debentures : Perpetual debt instruments (` in crore) Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series X FY 2015-16 ₹ 10 lakh each 27-08-2015 158.74 158.49 9.90% 27-08-2025 Redeemable at par at the end of 3653 days from the date of allotment Series AL FY 2015-16 ₹ 10 lakh each 18-03-2016 50.07 49.96 9.50% 18-03-2026 Redeemable at par at the end of 3652 days from the date of allotment Series I FY 2015-16 ₹ 10 lakh each 30-03-2016 55.04 55.08 10.10% 30-03-2026 Redeemable at par at the end of 3652 days from the date of allotment Series U FY 2015-16 ₹ 10 lakh each 30-03-2016 54.91 54.92 9.90% 30-03-2026 Redeemable at par at the end of 3652 days from the date of allotment Series AO FY 2015-16 ₹ 10 lakh each 30-03-2016 32.77 32.73 9.50% 30-03-2026 Redeemable at par at the end of 3652 days from the date of allotment Series E FY 2016-17 ₹ 10 lakh each 03-06-2016 16.19 16.18 9.60% 03-06-2026 Redeemable at par at the end of 3652 days from the date of allotment 367.72 367.36 15(b) Unsecured redeemable non convertible debentures : Subordinate debt instruments (` in crore) Series details Face value per debenture Date of allotment Balance as at March 31, 2025 (₹ in crore) Balance as at March 31, 2024 (₹ in crore) Interest rate % p.a. Date of redemption Redeemable terms Series E FY 2014–15 ₹ 10 lakh each 30–06–2014 – 43.14 10.40% 28–06–2024 Redeemable at par at the end of 3651 days from the date of allotment Series N FY 2014–15 ₹ 10 lakh each 13–11–2014 – 103.42 9.10% 13–11–2024 Redeemable at par at the end of 3653 days from the date of allotment Series M FY 2014–15 ₹ 10 lakh each 31–12–2014 – 51.24 9.95% 31–12–2024 Redeemable at par at the end of 3653 days from the date of allotment Series S FY 2014–15 ₹ 10 lakh each 19–01–2015 – 127.11 8.75% 17–01–2025 Redeemable at par at the end of 3651 days from the date of allotment Series O FY 2014–15 ₹ 10 lakh each 29–01–2015 – 101.51 9.35% 29–01–2025 Redeemable at par at the end of 3653 days from the date of allotment Series U FY 2014–15 ₹ 10 lakh each 18–02–2015 – 227.04 8.75% 18–02–2025 Redeemable at par at the end of 3653 days from the date of allotment Series S FY 2014–15 ₹ 10 lakh each 30–03–2015 – 55.00 9.95% 28–03–2025 Redeemable at par at the end of 3651 days from the date of allotment