Arohan Annual Report 2023-2024

FUNDING FOR BUSINESS GROWTH FY 2024 witnessed significant changes in the growth of the microfinance industry supported by increased confidence of lenders and investors in the sector and a stable outlook view from the rating agencies. The debt funding in FY 2024 is 29.1%, higher than FY 2023 (source: Micrometer, Issue 49); similarly, strong performance and stable outlook of the sector has helped the industry to borrow at relatively lower rate (weighted average cost of fund decreased to 11.1% for borrowing outstanding as of March 31, 2024 as compared to 11.8% as of March 31, 2023 (source: Micrometer, Issue 49). Managing Liquidity The key underlying principle for Arohan’s fund raise activity is to leverage the Company’s financial and operational position to maintain sufficient funds and to lower the cost of borrowings. The Company started FY 2024 by raising equity in CCPS of INR 66 Cr from FMO in April 2023 and of INR 200 Cr from IFU in May 2023. The equity infusion along with better portfolio quality aided in upgrading the credit rating of the Company from both the rating agencies i.e. ICRA & CARE in FY 2024. Leveraging the above conditions of change in rating outlook, business performance and portfolio quality, the Company improved debt to equity ratio from 3.39 in FY 2023 to 3.14 in FY 2024; while overall raising a fund of INR 5,207.69 Cr from the market in FY 2024. The above factors aided the Company to continue diversifying its lender base in FY 2024 and to borrow from various lenders including PSU, Private Banks, NBFCs, Foreign Financial Institutions, etc. increasing the total number of lenders to 49 as compared to 38 in FY 2023. Overall, the Company borrowed INR 5,208 Cr from the market in FY 2024. Some prominent lender relationships are State Bank of India, SIDBI, IDFC First Bank, Standard Chartered Bank etc. During the current financial year, Arohan successfully re-established new lender relationships with leading banks including DBS Bank, DCB Bank, Yes Bank, Vivriti Finance, HDFC, Axis Bank, ICICI Bank etc. Additionally, the Company also raised funds through structured debts to maintain our cost of borrowing without compromising on liquidity. The Company executed partial recourse transactions (PTC), as well as non-recourse transactions (Direct Assignment) of a total INR 1118.12 Cr in FY 2024 as compared with INR 1531 CR in FY 2023. Arohan raised INR 208 Cr of Non-Convertible Debenture (NCD) from FMO. The Company has reported a healthy Capital Adequacy Ratio of 29.01% as on March 2024. Arohan’ s Cash and Cash Equivalent and other Expenditure Interest expenses have increased by 26% y-o-y in line with an increase in borrowings. With the employee count increasing from 8,030 in FY 2023 to 9,333 in FY 2024, employee costs also increased from INR 246 Cr in FY 2023 to INR 325 Cr in FY 2024 showing a 32% increase over the previous year. The administrative costs have increased by 37% from the previous year due to increase in business volume. Ratios FY 2023-24 FY 2022-23 Variance Yield 23.87% 20.38% 17.12% Finance cost 11.70% 11.62% 0.69% Qualifying assets 78.95% 78.76% 0.24% Opex 7.44% 7.25% 2.62% CRAR 29.01% 28.74% 0.94% Leverage 3.14 3.39 -7.37% BALANCE SHEET ANALYSIS Loan Portfolio Gross Loan Portfolio Growth in INR Crs FY 2024 89 198 144 153 Organic Sourcing & Collection Term Loan ArohanPrivilege Buyout Assigned 368 8000 7000 6000 5000 4000 3000 2000 1000 0 6160 Arohan recorded a 33% growth in the Gross Loan Portfolio from the previous year and crossed the 7000 mark at INR 7,112 Cr. Net Worth Net Worth INR in Crs 6,016 4,533 1915 1,338 FY 2024 FY 2023 Debt Outstanding Net Worth 7000 6000 5000 4000 3000 2000 1000 0 Outstanding borrowing and Net worth have been increased by 33% & 44%inFY 2023-24 over FY 2022-23 due to growth in business and increased capital base respectively. 47 | Annual Report 2023-24

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