Northern Arc Capital Limited has submitted its Business Responsibility & Sustainability Report (BRSR) for the financial year 01 April 2025 to 31 March 2026, pursuant to Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The report, forming part of the company's Annual Report for FY 2025-26, provides comprehensive disclosures across all nine principles of the National Guidelines on Responsible Business Conduct (NGRBC), covering governance, environmental stewardship, employee well-being, human rights, and community engagement. Northern Arc Capital, incorporated in 1989 and registered in Chennai, Tamil Nadu, operates as a Non-Banking Finance Company (NBFC) with 100% of its turnover derived from financial services (NIC Code: 64990).

Corporate Profile and Operations

Northern Arc Capital operates 91 offices across 8 states in India, with no international operations. The company's paid-up capital stands at INR 1,61,57,18,750. Its five wholly-owned or majority-owned subsidiaries — Northern Arc Investment Managers Private Limited, Northern Arc Creditech Solutions Private Limited, Northern Arc Securities Private Limited, Northern Arc Foundation, and Pragati Finserv Private Limited (90.10% held) — all participate in the company's Business Responsibility initiatives. The company serves a diverse customer base including rural and retail customers, MSMEs, originator partners, emerging corporates, and institutional investors, with disclosures made on a standalone basis.

Workforce and Employee Well-Being

As of 31 March 2026, Northern Arc Capital employed a total of 1,524 employees, comprising 1,126 permanent and 398 other-than-permanent employees. The workforce is predominantly male, with 1,270 male employees (83.33%) and 254 female employees (16.67%). The Board of Directors comprises 9 members, of whom 3 (33.33%) are women. All permanent employees are covered under health insurance and accident insurance, and the company reported a well-being expenditure of 0.08% of total revenue for FY 2025-26. The overall employee turnover rate for permanent employees stood at 51.80% for FY 2025-26, compared to 67.38% in FY 2024-25 and 72.22% in FY 2023-24.

Human rights training coverage improved significantly, with 55.64% of total employees (848 out of 1,524) receiving training in FY 2025-26, compared to 31.31% (464 out of 1,482) in FY 2024-25. All permanent and other-than-permanent employees are paid above the statutory minimum wage. The return-to-work and retention rates for permanent employees who took parental leave were both 100% for FY 2025-26.

Governance, Ethics, and Compliance

Northern Arc Capital's policies cover all nine NGRBC principles, each approved by the Board and extended to value chain partners. The company reported nil monetary and non-monetary penalties, fines, or disciplinary actions against directors, KMPs, or employees for bribery or corruption in both FY 2025-26 and FY 2024-25. Conflict of interest complaints for directors and KMPs were also nil in both years. The number of days of accounts payables declined from 54 days in FY 2024-25 to 44 days in FY 2025-26. Sales to related parties as a percentage of total sales stood at 0.19% in FY 2025-26, down from 0.45% in FY 2024-25, while investments in related parties as a percentage of total investments declined from 15.62% to 7.27% over the same period.

Customer complaints received during FY 2025-26 totalled 29,768, with 156 pending resolution at year-end, compared to 938 complaints and nil pending in FY 2024-25. Shareholder complaints declined sharply from 53 in FY 2024-25 to 1 in FY 2025-26, with none pending at year-end.

Environmental Performance

As an NBFC, Northern Arc Capital's direct environmental footprint is limited, with e-waste being the primary waste category. Total non-renewable energy consumption increased to 2099.34 GJ in FY 2025-26 from 1801.75 GJ in FY 2024-25, driven by electricity consumption of 2063.84 GJ and fuel consumption of 35.50 GJ. The company reported no renewable energy consumption in either year.

Scope 1 GHG emissions for FY 2024-25 have been restated from 11.68 metric tonnes of CO2 equivalent following a refinement in calculation methodology, with no material impact on overall emission intensity. Scope 3 emissions reporting was enhanced in FY 2025-26 to cover 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), and Category 7 (Employee commuting). All e-waste is disposed of through Pollution Control Board-approved recyclers.

CSR Activities and Social Impact

Northern Arc Capital's CSR obligation for FY 2025-26, computed as 2% of the average net profit of the preceding three financial years, amounted to INR 7,52,66,825. The company spent the entire obligated amount, with nil unspent balance transferred to the Unspent CSR Account.

CSR projects during the year benefited multiple vulnerable groups, including 50 differently abled children through a residential education programme, 40 patients through palliative care services, 624 students (comprising 200 MBBS, 384 Nursing, and 40 Physiotherapy students) from economically and socially disadvantaged backgrounds, and 3,619 cumulative and indirect beneficiaries through the FoodHeals ration programme. The CSR Committee, chaired by Mr. Ashutosh Pednekar (Non-Executive, Independent Director), held 3 meetings during the year, all attended by all members.

Material ESG Issues and Strategic Commitments

The BRSR identifies nine material responsible business conduct issues, spanning responsible lending and client engagement, transparent and ethical governance, responsible collections, financial inclusion, prudent enterprise risk management, technology-enabled credit access, ESG integration, human capital development, and data privacy and cybersecurity. Each issue is assessed for its risk or opportunity classification, with corresponding mitigation strategies and financial implications disclosed.

Key forward-looking commitments outlined in the report include:

• Increasing women's representation in the workforce from 17% to 22% and in leadership positions from 11% to 15% by 2030
• Achieving climate finance of INR 1,000 crore by 2030
• Achieving financing of INR 4,000 crore to women-owned or women-led businesses by FY 2028-29
• Delivering a minimum 15% year-on-year growth in financial inclusion outreach from FY 2026-27 through FY 2028-29
• Expanding branch operations to 15 additional underserved districts by FY 2028-29

The company is affiliated with seven national trade and industry associations, including FIDC, MFIN, UFF (previously DLAI), FACE, IAMAI, ASSOCHAM, and FICCI. No independent external assurance was obtained for the BRSR disclosures for FY 2025-26.

Northern Arc Capital has scheduled its 18th Annual General Meeting (AGM) for August 18, 2026, at 11:30 A.M. (IST) via Video Conferencing (VC) or Other Audio Visual Means (OAVM). The meeting will seek shareholder approval for significant capital raising measures, governance updates, and executive remuneration revisions. The company aims to raise up to ₹5,000 crore through private placement of Non-Convertible Debentures (NCDs) and enhance its overall borrowing limit to ₹17,000 crore to support business expansion and loan disbursements.

The remote e-voting window opens on August 14, 2026, and closes on August 17, 2026, with voting rights determined by shareholding as of the cut-off date, August 12, 2026. E-voting services are facilitated by National Securities Depository Limited (NSDL).

AGM Schedule and Voting Details

The following table summarises the key dates and logistics for the 18th AGM:

Capital Raising and Borrowing Limits

Shareholders will be asked to approve special resolutions for the issuance of NCDs and an increase in borrowing powers under Section 180(1)(c) of the Companies Act, 2013. The proposed NCD issuance of up to ₹5,000 crore is intended to augment resources for on-lending, refinance existing debt, meet working capital requirements, and fund general corporate purposes. Simultaneously, the Board seeks consent to create charges on company assets under Section 180(1)(a) of the Companies Act, 2013. The total borrowing limit, inclusive of interest and other monies payable, will increase from ₹15,000 crore to ₹17,000 crore.

Auditor Appointment and Governance

Pursuant to Reserve Bank of India (RBI) guidelines for NBFCs with asset sizes exceeding ₹15,000 crore, Northern Arc Capital must appoint joint statutory auditors. The company proposes appointing M/s. R. Subramaniyan and Company LLP as Joint Statutory Auditors alongside existing auditors M/s. Walker Chandiok & Co. The appointment is for a three-year term commencing from the conclusion of this AGM until the 21st AGM in FY29-30.

Additionally, the Board seeks re-appointment of Mr. Vijay Nallan Chakravarthi as a director liable to retire by rotation. His extensive experience in private equity and investment management aligns with the company's strategic direction.

FY26 Financial Performance

Northern Arc Capital delivered robust financial performance in FY26, supported by continued business growth and disciplined execution. Key consolidated financial highlights are presented below:

The company's Direct-to-Customer (D2C) AUM grew 38.60% year-on-year to INR 9,792 Crore, with D2C mix rising to 59% of total lending assets. Consumer Finance AUM surged 50% to INR 5,092 Crore, MSME Finance AUM grew 43% to INR 3,691 Crore, and Rural Finance AUM stood at INR 1,009 Crore. Placement fee income grew 22% year-on-year to INR 31.40 Crore, while Funds AUM stood at INR 3,092 Crore as of March 31, 2026.

Executive Remuneration Revisions

The AGM will address revisions to the remuneration of key leadership roles:

• Mr. P S Jayakumar (Chairperson): Approval is sought for a revised commission of ₹2.03 crore for FY26-27, excluding sitting fees. This amount represents 0.5% of net profits and exceeds 50% of the total annual remuneration payable to all non-executive directors, necessitating shareholder approval under SEBI Listing Regulations.
• Mr. Ashish Mehrotra (MD & CEO): The Board recommends revising his managerial remuneration effective April 1, 2026. The package includes a fixed pay of ₹6.05 crore per annum and variable pay of ₹3.52 crore per annum (80% paid in FY26-27, 20% deferred). Additionally, shareholders are asked to ratify a Special Discretionary Payout of ₹2.10 crore for FY25-26, recognising his contribution to achieving 22% YoY growth in lending AUM and 33% YoY growth in Profit After Tax.

ESOP Plan Implementation Change

A special resolution will amend the Northern Arc Employee Stock Option Plan 2016 to shift implementation from the Trust Route to the Direct Route. This procedural change aims to reduce administrative burdens and operational delays associated with share allotment through the Northern Arc Employee Welfare Trust. Under the direct route, equity shares will be allotted directly to eligible employees upon exercise of options. The total ESOP pool remains at 94,78,967 options, with 7,05,267 ungranted options available for future grants.

Source: https://lodr-files.dhan.co/lodr-inputs/Company/INE850M01015/6866463c-ad6e-44c7-b148-c8402060400c.pdf