Dear Members,

Your directors have pleasure in presenting the 29^th ANNUAL REPORT on the business and operations of our Company and the Audited Financial Statements together with the Auditors Report for the year ended 31^st March 2023.

The revenue of Kreon in the Financial Year 2022-2023 is Rs.961.76 Lakhs, compared to Rs 428.90 Lakhs in the Financial Year 2021 -2022. During the year under review, Kreon has made a profit of Rs. 458.00 Lakhs for the Financial Year 2022-2023 as compared to Rs.210.03 Lakhs for the Financial Year 2021-2022.

The Company is operating as a Non-Banking Financial Company (Non- Deposit Taking Company). There are no changes in the nature of business.

There was further issue of shares during the financial year which is disclosed in detail under the head "Issue of Shares/Warrants on preferential basis" in this report.

The Authorized share capital of the Company as on 31^st March 2023, is Rs.30,00,00,000/-(Rupees Thirty Crores only) divided into 2,50,00,000 (Two Cores Fifty Lakhs) Equity Shares of Rs. 10 (Rupees Ten only) each and 50,00,000 (Fifty Lakhs) Compulsory Convertible Preference Shares of Rs. 10 (Rupees Ten only) each. There is no increase in the Authorized capital during the Financial Year 2022-23.

The paid-up share capital as on 31^st March, 2022 was Rs.10,90,60,000/- (Rupees Ten Crore Ninety Lakhs Sixty Thousand only) divided into 1,05,86,000 (One Crore Five Lakh Eighty-Six Thousand) Equity shares of Rs.10/- each and 3,20,000 (Three Lakh Twenty Thousand only) Compulsory Convertible Preference Shares of Rs. 10 (Rupees Ten only) each. The paid-up share capital as on 31^st March, 2023 is Rs.13,62,30,000/- (Rupees Thirteen Crore Sixty-Two Lakh Thirty Thousand only) divided into 1,32,63,000 (One Crore Thirty Two Lakh Sixty Three Thousand only) Equity shares of Rs.10/- each.

The Board of Directors at their meeting held on 7^th February 2023, allotted 1,60,000 (One Lakhs Sixty Thousand only) Equity Shares of Rs. 10/- each at a premium of Rs.10/- each against conversion of 3,20,000 (Three Lakh Twenty Thousand) CCPS of Rs.10/- each. Also, the Board of Directors at their meeting held on 28^th March 2023, allotted 28,77,000 (Twenty-Eight Lakh Seventy-Seven Thousand only) Equity Shares of Rs. 10/- each at a premium of Rs.11/- each against conversion of 28,77,000 (Twenty- Eight Lakh Seventy-Seven Thousand only) warrants issued at a price of Rs.21/- each against request for conversion by the equity shareholders on payment of full amount towards the warrants.

The money received on subscription of the warrants has been used for the object stated in the object of issue and no deviation has resulted in utilisation of the money.

The available resources are being conserved for future operations, hence no dividend is being proposed for the Financial Year 2022-23.

Company is a non-banking finance company (NBFC) and as per Sec 45IC(i) of RBI Act, 1934, our Company has transferred 20% of the Net Profits to General Reserves amounting to Rs.91.60 Lakhs (Rupees Ninety One Lakh Sixty Thousand only) for the Financial year ended 31^st March 2023.

The Submission of Extract of Annual Return in MGT-9 is dispensed with in terms of Companies (Management and Administration) Amendment rules, 2021 dated 5^th March, 2021. Hence, the MGT-9 has not been attached with this report. A copy of the Annual Return to the extent it can be filled up can be viewed in the website of the company at www.kreon.in.

Since the Company is Non-Banking Financial Company registered with the RBI, the disclosures pertaining to Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are not applicable.

Our Company, being a Non-Deposit taking NBFC, has complied with all applicable Regulations of the Reserve Bank of India (RBI). As per Non-Banking Finance Companies RBI Directions, 1998, the Directors hereby report that the Company did not accept any public deposits during the year and did not have any public deposits outstanding at the end of the year.

Our Company has always responded in a prudent manner in protecting the environment in which it operates. During the year, for our Company, provisions as to Corporate Social Responsibility is not applicable.

M/s Brickwork Ratings India Pvt. Ltd. (BWR) assigned following ratings to the Company:

1 Fund based - Bank Loan - Rs.10 Crores Only BWR BB/Stable Assignment Term loans (Proposed)

All Contracts / Arrangements / Transactions entered by the Company during the financial year with Related

Parties were in ordinary course of business and on arm's length basis. Particulars of such Related Party

Transactions is described in Form AOC-2 as required under Section 134 (3)(h) of the Act, read with Rule 8(2) of the Companies (Accounts) Rules 2014, which is annexed herewith as "ANNEXURE - I". The board has approved a Policy for Related Party Transactions which has been hosted on the website of the Company http://www.kreon.in/wp-content/uploads/2020/07/Policy-on-Related- Party-Transaction.pdf. There were no materially significant Related Party Transactions entered into by the company during the year under review, which may have potential conflict with the interest of the company at large. There were no pecuniary relationship or transactions entered into by any Independent Directors with the company during the year under review.

The Company does not have any Subsidiary or Joint Venture or Associate Company.

Directors of the Company as on date as follows:

During the year under review, there has been no change in the constitution of Board i.e. the structure of the Board remains the same.

In terms of Section 152 of the Companies Act 2013, Ms. Henna Jain, Director, retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

Mr.Jaijash Tatia, has been appointed as the Whole-Time Director of the Company for a period of Five years w.e.f 01.04.2018 to 31.03.2023. During the FY 2022-23, the shareholders at the Annual General Meeting held on 30^th August 2022, approved the appointment of Mr.Jaijash Tatia, as the Wholetime Director of the Company for a further period of Three years w.e.f. 01.04.2023 to 31.03.2026. Accordingly, he will hold the office till 31^st March 2026.

The company's policy relating to appointment of directors, payment of managerial remuneration, directors' qualifications, positive attributes, independence of directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished as attached to this report. "ANNEXURE - II".

Details of managerial remuneration as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and information required under Section 197 of the Act read with rule 5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)

Rules, 2014 are mentioned as per "ANNEXURE - III".

Pursuant to the provisions of 134(3)(p) the Companies Act, 2013 the Board has carried out the annual performance evaluation of its own performance, and that of its committee, chairperson and individual directors. Inputs were received from the directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

In pursuant to Regulation 17(10) Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 the evaluation of independent directors was done by the entire board of directors which includes a. Performance of the directors; and b. Fulfilment of the independence criteria as specified in the regulations and their independence from the management.

The Board evaluated the roles, functions, duties of Independent Directors (ID's) of the Company. Each ID was evaluated by all other directors other than director being evaluated.

The Board has also reviewed the manner in which ID's follow guidelines of professional conduct. Following has also been revied:

(i) Performance review of all the non-independent directors of the company on the basis of the activities undertaken by them, expectation of Board and level of participation;

(ii) Performance review of the Chairman of the Company in terms of level of competence of Chairman in steering the Company;

(iii) The review and assessment of the flow of information by the Company to the Board and manner in which the deliberations take place, the manner of placing the agenda and the contents therein;

(iv) The review of the performance of the directors individually, its own performance as well as evaluation of working of its Committees shall be carried out by the Board;

(v) Based on performance evaluation, Nomination and Remuneration Committee and the Board shall determine whether to extend or continue the term of appointment of ID subject to all other applicable compliances.

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.

M/s J. V. Ramanujam & Co, Chartered Accountants (Firm Registration No. 02947S) were reappointed as Statutory Auditors of the Company at the 28^th Annual General Meeting (AGM) held on August 30, 2022, for a second term of five years from the conclusion of the 28^th Annual General Meeting till the Conclusion of the 33^rd Annual General Meeting.

M/s J. V. Ramanujam & Co, Statutory Auditors, vide letter dated January 10, 2023, submitted their resignation to the Board through Audit Committee, giving the reason that majority of partners of the firm M/s J V Ramanujam & Co., Chartered Accountants, having FRN: 002947S, had called for dissolution of the firm with effect from January 1, 2023 and they are unable to continue as Statutory Auditors of the Company with effect from the same date as per the required auditing standards, legal requirements and related guidelines.

M/s Darpan & Associates, Chartered Accountants (Firm Registration No. 016156S) were appointed as Statutory Auditor's to fill casual vacancy caused by resignation of M/s J V Ramanujam & Co., Chartered Accountants, at the Board meeting dated 17^th January 2023 and approved by the shareholder through Postal ballot E-voting process for which the resolution was deemed to be passed on 15^thApril 2023, till the conclusion of the ensuing Annual General meeting.

M/s Darpan & Associates, Chartered Accountants (Firm Registration No. 016156S), are willing to be appointed as the Statutory Auditors of the Company for a period of 5 years until the conclusion of the 34^th Annual General Meeting and has given their consent. The Board recommends their appointment at the ensuing Annual General Meeting. The Board of Directors have adopted the Auditors Report as issued by the Statutory Auditor.

There are no qualifications, reservations, remarks or disclaimers made by the Statutory Auditors, in their audit report.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Lakshmmi Subramanian & Associates, Practising Company Secretaries, to undertake the secretarial audit of the company. The Secretarial Audit Report issued for the FY 2022-23 by the secretarial auditor, P.S.Srinivasan, Associate partner, M/s. Lakshmmi Subramanian & Associates, Practicing Company Secretaries bearing (CP No. 3122 ; ACS No. 1090) is annexed herewith as "ANNEXURE - IV".

There are no qualifications, reservations, remarks or disclaimers made by the Secretarial Auditors, in their audit report.

Maintenance of cost records and requirement of cost audit as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 are not applicable to the Company.

During the year under review, the Statutory Auditors and the Secretarial Auditor have not reported any instances of frauds committed in the Company by its officers or employees, to the Audit Committee under Section 143(12) of the Companies Act, 2013, details of which need to be mentioned in this Report.

There have been no material changes and commitments that would affect the financial position of the Company from the end of the Financial Year of the Company to which the Financial Statements relate and the date of the Directors Report.

Financing activity is the business of management of risks, which in turn is the function of the appropriate credit models and the robust systems and operations.

Our Company continues to focus on the above two maxims and is always eager to improve upon the same.

Pursuant to Regulation 21(5) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the regulations of Risk Management Committee is applicable to top 1000 listed entities determined on the basis of market capitalization, as at the end of the immediate previous financial year. Kreon does not have the statutory requirement to have risk management committee. However, the Company ensure to take steps to identify, assess and control risks which in the opinion of the Board may threaten the business activities of Kreon.

The Companies Act, 2013 read with Rule 8(5)(viii) of Companies (Accounts) Rules, 2014 re-emphasizes the need for an effective Internal Financial Control system in the Company which should be adequate and shall operate effectively. The Company has devised a proper system of internal financial control which is commensurate with size and nature of Business. The Board has also re-appointed M/s. R. Baskaran & Co., Chartered Accountants as an Internal Auditor of the Company pursuant to provisions of Section 138 of the Companies Act, 2013. The internal financial control mechanism adopted and exercised are adequate to the size of the Company.

The Company has obtained ISO 9001:2015 & ISO 27001:2013 Certification from an independent, internationally accredited certification company, an internationally recognized standard that ensures our products and services meet the needs of our customers through an effective quality management system.

As per Regulation 34 (3) read with Schedule V of the SEBI (LODR) Regulations, 2015, Corporate Governance

Report is annexed as "ANNEXURE - V" to this Report.

As required by Schedule V of the SEBI (LODR) Regulations, 2015, Auditor's Certificate on Corporate Governance as certified by M/s Darpan & Associates are annexed as "ANNEXURE - VI" to this Report confirming compliances with the conditions of Corporate Governance.

The Board met seven (7) times during the financial year under review, the details of which are given in the Corporate Governance Report "ANNEXURE - V". The intervening gap between the Meetings was within the period prescribed under the Companies act, 2013.

The Chief Financial Officer of the Company has certified to the Board on Financial Statements and other matters pertaining to Financial Year ended 31st March 2023, in accordance with Regulation 17(8) of the SEBI (LODR) Regulations, 2015, which is annexed as "ANNEXURE - VII" to this Report.

Certificate of Non-Disqualification of Directors (Pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015) for the year ending 31^st March 2023, has been obtained from M/s. AXN Prabhu& Associates, Mr. AXN Prabhu, Practising Company Secretary, C.P #11440; Membership No. 3902 which is annexed as "ANNEXURE - VIII" to this report.

The Company has been adopting the policies and requirements as mandated under various statutes to the extent and as far as possible and shall always strive to abide by the laws and by- laws as applicable.

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. Company is complying with the Secretarial Standards issued by the Institute of Company Secretaries of India.

The Company continues to comply with all the applicable regulations prescribed by the Reserve Bank of India ("RBI"), from time to time.

In accordance with the applicable provisions of the Master Direction issued by the Reserve Bank of India and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed analysis of the Company's performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report.

Since the Company is operating in service sector, the provisions of Section 134(3)(m) of the Companies Act, 2013 regarding conservation of energy and Technology Absorption are not applicable.

During the FY 2022-23, Company has incurred an expenditure in foreign currency on purchase / subscription to software of Rs.17.27 Lakhs. During the period 2021-22, there amount of outflow was Rs. 10.50 Lakhs.

There was no material order passed by Regulators / Courts / Tribunals during the year under review.

Our Company has always believed in providing a safe and harassment free workplace for every individual working in Company's premises through various interventions and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

Our Company has a Policy for prevention of Sexual Harassment at workplace and copy of the same has been disclosed on the Company's website www.kreon.in, which aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behaviour.

The Company had instituted an Internal Complaints Committee for redressal of sexual harassment complaint (made by the victim) and for ensuring time bound treatment of such complaints comprising of the following members: I. Whole Time Director Mr. Jaijash Tatia II. Director Ms. Henna Jain III. Chief Financial Officer Mrs. Shoba Nahar

During the Financial year under review there were no cases reported under the said policy.

Pursuant to the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of its Board and its Powers) Rules, 2014 and in accordance with Regulation 22 of SEBI (LODR) Regulations, 2015 the Company has an established Policy on Vigil Mechanism for Directors / Employees and other stakeholders of the Company to report concerns about unethical behaviour, actual or suspected fraud, or violation of the Company's Code of conduct or ethics policy. The policy also provides a direct access to the Chairman of the Audit Committee to make protective disclosures to the Management about the grievances or violation of the Company's Code of Conduct. The policy is disclosed on the Company's websitehttp://www.kreon.in/wp- content/uploads/2020/07/Vigil-Mechanism-or-Whistle-Blower-Policy.pdf.

The Board of Directors of the Company have from time to time framed and approved various Policies in pursuance of the Companies Act, 2013 and the Listing Agreement/ SEBI (LODR)Regulations, 2015. These Policies and Codes are reviewed by the Board and are updated, if required. The following policies have been framed and has been disclosed on the Company's website www.kreon.in:

1. Code of conduct for Directors, Senior Management and Independent Directors

2. Policy for prevention of sexual harassment (POSH)

3. Policy on determination of Materiality of Events or Information

4. Board diversity policy

5. Performance evaluation policy

6. Succession plan for the Board and Senior Management

7. Risk management Policy

8. Vigil Mechanism or Whistle Blower Mechanism

9. Policy on preservation of documents

10. Policy on Related Party Transaction

11. Criteria for making payment to Non-Executive Directors

12. Terms and conditions for appointment of independent Directors 13. Familiarization Program for Independent Directors

14. Code for prevention of Insider Trading in securities

During the year under review, the Company has not obtained any registration/ license / authorisation, by whatever name called from any other financial sector regulators.

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3) (c) of the Companies Act, 2013:

a) that in the preparation of the Annual Financial Statements for the year ended 31^st March, 2023, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

b) that such Accounting Policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2023 and of the profit of the Company for the year ended on that date;

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

d) that the Annual Financial Statements have been prepared on a going concern basis

e) that proper Internal Financial Controls were in place and that the financial controls were adequate and were operating effectively; and

f) that system to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

The Directors place on record their appreciation to all those people, who have so willingly placed their trust in the Company & the Management and to all the customers across all areas of our operations, who have given the Company an opportunity to serve them.

The Company looks forward to further strengthening the synergies. The entire KFSL Team deserves the appreciation for their sincere efforts and determination to excel. The core team of KFSL plays a pivotal role in articulating and implementing the strategic decisions and thus contributing to the development of the company. I take this opportunity to express my heartfelt appreciation for their continuous support, hard work and dedication.

We trust this journey will continue to be a pleasant one with their support, aware of the fact that we have

"Miles to go.… with the confidence that "Together We Can, and We Will."