1.24. 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:

(i) 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

(ii) 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.

1.25. Commitment:

Commitments are future liabilities for contractual expenditure, classified and disclosed as follows:

(i) estimated amount of contracts remaining to be executed on capital account and not provided for;

(ii) uncalled liability on shares and other investments partly paid;

(iii) funding related commitment to associate companies; and

(iv) 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.

1.26. 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.

Material accounting estimates and judgements used in various line items in the financial statements are as
below:

• Business model assessment (Refer note no. 1.10 (i) and 6)

• Impairment of financial assets (Refer note no. 1.10 (i), 6 and 47)

• Provisions and contingent liabilities (Refer note no. 1.24 and 37)

• Fair value of financial instruments (Refer note no. 1.12)

1.27. 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.

1.28. Recent Pronouncements:

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules as issued from time to time.

In May 2025, MCA notified amendments to:

Ind AS 21 - The Effects of Changes in Foreign Exchange Rates, applicable w.e.f. April 1,2025. The Company
has reviewed the amendment and based on its evaluation has determined that it does not have any significant
impact in its financial statements.

In August 2025, MCA notified the following amendments to:

Ind AS 7, Statement of Cash Flows and Ind AS 107, Financial Instruments: Disclosures, applicable w.e.f.
April 1,2025 - the amendment in Ind AS 7 requires to inform users of financial statements of the existence of
supplier finance arrangements and explain the nature of the arrangements, the carrying amount of liabilities
and the range of payment due dates. Ind AS 107 has been amended to add supplier finance arrangements
as a factor that may cause concentration of liquidity risk. The Company has reviewed the amendment and
based on its evaluation has determined that it does not have any impact in its financial statements.

Ind AS 12, International Tax Reform - Pillar Two Model Rules applicable immediately - The amendments
provide a temporary mandatory relief from deferred tax accounting for top-up tax and disclose that they
have applied the relief. This relief is immediate and applies retrospectively (refer note 49).

(h) Capital Management

- The objective of the Company's Capital Management is to maximise shareholder value, safeguard
business continuity and support the growth of its Group. The Group determines the capital requirement
based on annual operating plans and long-term and other strategic investment plans. The funding
requirements are met through loans and operating cash flows generated. The debt equity ratio is
3.95 as at March 31, 2026 (as at March 31, 2025 was 3.65).

- During the year ended March 31,2026, the Company has paid the final dividend of ? 2.75 per equity
share for the year ended March 31,2025 amounting to ? 686.77 crore. (PY 2024-25 ? 622.46 crore).

The Company has proposed a final dividend of ? 2.75 per share in the Board meeting subject to approval

from shareholders.

(I) Employee Stock Option Scheme

- The Company has formulated Employee Stock Option Schemes 2010 (ESOP Scheme-2010) and 2013
(ESOP Scheme 2013). The grant of options to the employees under the stock option schemes is on
the basis of their performance and other eligibility criteria. The options allotted under the scheme
2010 are vested over a period of four years in the ratio of 15%, 20%, 30% and 35% respectively
from the end of 12 months from the date of grant, subject to the discretion of the management and
fulfilment of certain conditions. The options granted under the scheme 2013 are vested in a graded
manner over a period of four years with 0%, 33%, 33% and 34% of grants vesting each year,
commencing from the end of 24 months from the date of grant or w.e.f. July 10, 2019 vested in a
graded manner over a period of four years with 25%, 25%, 25% and 25% of grants vesting each
year, commencing from the end of 12 months from the date of grant.

- Options allotted under scheme 2010 can be exercised anytime within a period of 7 years from the
date of grant and would be settled by way of equity. The option granted under scheme 2013 can be
exercised anytime within a period of 8 years from the date of grant. Management has discretion to
modify the exercise period.

- The option granted under scheme 2010 is at exercise price of ? 44.20. The option granted under
scheme 2013 can be exercised either at market price which was the last closing price on National
stock exchange preceding the date of grant or w.e.f. July 10,2019 ? 10 respectively.

- During the year ended March 31, 2026 Nil (Previous year - 65,000) and 95,17,915 (Previous year -
58,62,791) options were allotted under the scheme 2010 and 2013 respectively.

Notes:

1. Capital Redemption Reserve: Capital redemption reserve (CRR) represents reserve created pursuant to
Section 55 (2) (c) of the Companies Act, 2013 by transfer of an amount equivalent to nominal value of
the Preference shares redeemed. The CRR may be utilised by the Company, in paying up unissued shares
of the Company to be issued to the members of the Company as fully paid bonus shares in accordance
with the provisions of the Companies Act, 2013.

2. Debenture redemption reserve: The Ministry of Corporate Affairs vide notification dated August 16,
2019, amended the Companies (Share capital and Debenture) Rules, 2014 by which the Company is no
longer required to create DRR towards the debentures issued. Earlier to this amendment, the Company
was required to maintain a DRR of 25% of the value of debentures issued, either by a public issue
or on a private placement basis and the amounts credited to the DRR was not to be utilised by the
Company except to redeem debentures. The above amount represents the DRR created out of profits of
the Company prior to the said notification.

3. Securities premium: The amount received in excess of face value of the equity shares is recognised in
Securities Premium. The reserve can be utilised only for limited purposes such as issuance of bonus shares
in accordance with the provisions of the Companies Act, 2013.

4. General Reserve: The Companies (Transfer of Profits to Reserves) Rules, 1975 read with Section 205(2A)
of the Companies Act, 1956, prohibited declaration of dividend for any financial year out of profits of the
company for that year except after the transfer of a specified percentage of the profits not exceeding 10%,
to its reserves. Amounts were transferred to General Reserve to comply with these provisions. The Companies
Act, 2013, does not mandate such a transfer.General reserve is a free reserve available to the Company.

5. Reserve u/s 45 IC of Reserve Bank of India Act, 1934: The Company created a reserve pursuant to
section 45 IC the Reserve Bank of India Act, 1934 by transferring amount not less than twenty per
cent of its net profit every year as disclosed in the Statement of Profit and Loss and before any
dividend is declared.

6. Reserve u/s 29C of National Housing Bank, 1987: During the financial year 2020-21, upon
amalgamation of the erstwhile L&T Housing Finance Limited (the "Transferor Companies") with erstwhile

L&T Finance Limited (the "Transferee Company"), the statutory reserves (i.e. Reserve under section 29C of
National Housing Bank, 1987) of the Transferor Companies is also transferred to the Transferee Company.

7. Reserve u/s 36(1)(viii) of Income tax Act, 1961: In respect of any special reserve created and maintained
by a specified entity, an amount not exceeding twenty percent of the profits derived from eligible
business computed under the head "Profits and gains of business or profession" (before making any
deduction under this clause) is carried to such reserve account.

8. Retained earnings: Retained earnings represent the amount of accumulated earnings of the Company.

9. Employee stock option outstanding account: The reserve is used to recognise the fair value of the
options issued to employees of the Company and subsidiary companies under Company's employee stock
option scheme.

10. Impairment Reserve: As per the RBI circular RBI/2019-20/170 dated March 13, 2020, where the
guidelines require NBFCs to hold impairment allowances as required by Ind AS. In parallel NBFCs are
required to compute provisions as per extant prudential norms on Income Recognition, Asset Classification
and Provisioning (IRACP). A comparison, as prescribed, between provisions required under IRACP and
impairment allowances made under Ind AS 109 is required to be disclosed by NBFCs in the notes to their
financial statements to provide a benchmark to their Boards, RBI supervisors and other stakeholders, on
the adequacy of provisioning for credit losses. Where impairment allowance under Ind AS 109 is lower
than the provisioning required under IRACP (including standard asset provisioning), NBFCs are required to
appropriate the difference from their net profit or loss after tax to a separate 'Impairment Reserve'. The
balance in the 'Impairment Reserve' shall not be reckoned for regulatory capital. Further, no withdrawals
shall be permitted from this reserve without prior permission from the Department of Supervision, RBI. The
said reserve was created in erstwhile L&T Infra Credit Limited which has been merged with the Company.

Notes:

1 Transactions shown above are excluding GST, if any.

2 Managerial Remuneration excludes provision for gratuity, pension and compensated absences, since
it is provided on actuarial basis for the company as a whole and includes director sitting fees and
commission.

3 The above NCD balance includes purchase from primary market and are held by related party as on
reporting date

4 Transactions with related parties are carried out in the normal course of business and at standard
market rates on an arm's length basis.

5 During the financial year, there were no transactions entered into with any entity in which KMP or
their relatives exercise significant influence.

6 The Company has not engaged in any transactions with the relatives of its KMP during the financial
year.

7 The Company has not engaged in any transactions pertaining to loans,advances or investments with
companies in which the director's have a vested interest.Hence,the disclosure pursuant to Schedule V
of Clause A.2 of Regulation 34 (3) and Regulation 53(f) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 are not applicable to the company.

33 Disclosure pursuant to Ind AS 19 “Employee Benefits"

(i) Defined Contribution Plan:

The Company's state governed provident fund scheme are defined contribution plan for its employees
and for a certain categories of employees made to a trust viz. The Larsen & Toubro Officers & Supervisory
Staff Provident Fund constituted by the ultimate parent company, which is permitted under The employee's
Provident Funds and Miscellaneous Provisions Act, 1952. The Contribution by the employer and employee
together with interest accumulated there on are payable to the employee at the time of separation from
company or retirement whichever is earlier. The benefit vets immediately on rendering of services by the
employee. In addition to the above, information relating to the scheme operated by the trust constituted
by the holding company is given in the note (iii) below.

The Company has recognised charges of r 95.38 crore (previous year: r 73.91 crore) for provident fund
contribution is included in "Note 29 Employee Benefits Expenses" in the Statement of Profit and Loss.

(ii) Defined Benefits Gratuity Plan :

The Company has a gratuity plan for its employees which is governed by the Payment of Gratuity Act,
1972.The gratuity benefit payable to the employees of the Company is higher of the provisions of the
Payment of Gratuity Act, 1972 and the Company's gratuity scheme. The level of benefits provided
depends on the employee's length of service and last drawn salary.

The gratuity liability of the Company is funded through contributions to an approved gratuity fund
managed by an independent third-party fund manager/insurer. Any deficits in plan assets as compared to
actuarial liability determined by an actuary are recognised as a liability.

The contributions are determined based on actuarial valuation carried out at the end of each financial
year using the projected unit credit method. The calculation includes assumptions in actuarial valuations
with regard to discount rate, salary escalation rate, attrition rate,mortality rate risks and investment risk
as follows.

(v) Defined Benefits Provident Fund Plan

The Company contributes to a defined contribution provident fund for current employees under the
Employees' Provident Funds and Miscellaneous Provisions Act, 1952, with monthly contributions expensed
to the Statement of Profit and Loss as incurred.

Additionally, pursuant to a scheme of amalgamation in earlier years, Provident Fund Trust constituted by
the parent company are continued to manage and settle the accumulated balances of past employees
from the merged entity. No fresh contributions are made to this trust. In accordance with the guidance
issued by the Institute of Actuaries of India, the Company's actuary has provided the following information
regarding these provident fund arrangements:

(A) Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at
the valuation date for the estimated term of the obligations.

(B) Average historic yield on the investment portfolio:

The average rate of return earned on the investment portfolio of provident fund in the previous
three years.

(C) Expected investment return:

Expected investment return is determined by adding the yield spread to the discount rate for a
term of the obligation, where yield spread is the difference between the average historic yield on
the investment portfolio & discount rate for the remaining term to maturity of the investment
portfolio.

(D) Guaranteed rate of return:

The Regional Provident Fund Commissioner has not yet declared the interest rate for its own
subscribers for the current financial year 2025-26.

However, in view of the fall in equity values as at March 31, 2026 and fall in the returns on fixed
income instruments, we are of the view that going forward the future guaranteed rate is unlikely
to be in excess of 8.25% p.a. (previous year: 8.25% p.a.).

(iv) Goodwill is attributable to future growth of business out of synergies from the acquisition and
assembled workforce. The Goodwill is not deductible for income tax purposes.

(v) Under the Business Transfer Arrangement, the Company acquired the gold loan undertaking of the
Transferor as a slump sale rather than as a separate legal entity. Following the acquisition, these
operations were fully integrated into the Company's existing operations. Consequently, the revenue
and profit / (loss) of the acquired business are not separately identifiable, as the business now
leverages shared resources and unified overhead structures to achieve operational synergies.

(vi) Out of ? 1,334.83 crore of Loan book acquired ? 1,261.56 crore have been collected during the year.

(vii) The company has recognised consideration payable in accordance with terms of Business Transfer
Arrangement. No consideration is payable to the erstwhile promoters of the gold loan business upon
the achievement of certain targets and other conditions.

47 Risk Management

Basis

Robust risk management involves a systematic approach to identification, measurement and control of various
risks. All employees of the Company are responsible for the management of risks, including the Board of
Directors. The Board of Directors and its Risk Management Committee ensure that Management takes into
consideration all the relevant risk factors which could lead to unexpected fluctuations in financials or loss of
capital employed. Risks are evaluated from time to time and control measures as per defined frameworks as
approved by the board are executed. This helps in aligning the risk appetite to the Company's strategy to
deliver sustainable, long-term returns to its investors.

Types of risk

As a lending non-banking financial company, the most important risks faced are as follows:

• Credit risk

• Market risk

• Capital risk

In addition to the above Risks, Enterprise Risks, Operational Risks, Model Risks and Information Security risks
are also identified and monitored.

Credit risk

Credit risk is the risk of suffering financial loss due to customers or counterparties failing to fulfil their
contractual obligations which can result in losses for the company.

Credit risk arises mainly from retail and wholesale loans and advances and loan commitments arising from
such lending activities; but could also arise from credit enhancement provided, such as financial guarantees.
Credit risk arises due to

a) Default Risk - Borrower fails to repay

b) Credit worthiness risk - Borrower's credit profile deteriorates

c) Concentration Risk - over exposure to an industry or borrower or geography

The Company is also exposed to other credit risks arising from investments in debt securities and exposures
arising from its trading activities ("Trading Exposures") as well as settlement balances with market counterparties.

Credit risk is the one of the largest risk for the Company's business. Management therefore carefully manages
its exposure to credit risk. A centralized risk management function oversees the risk management framework,
and an overview of credit risk of portfolio is periodically presented to the Risk Management Committee.

Credit-worthiness in terms of intention to pay and cashflows assessment is evaluated prior to signing any
contracts, based on underwriting process including employing market information. Management endeavors
to constantly upgrade and improve its underwriting standards to reduce the credit risk and build a risk
calibrated portfolio.

Loans and advances (including loan commitments and guarantees)

The estimation of the risk of credit exposures is complex, as the same varies with changes in market conditions,
expected cash flow and the passage of time. Wholesale and retail portfolios are managed separately to reflect
the differing nature of the business strategy. As the Company is completely exiting the wholesale business by
way of sell down, the wholesale portfolio is classified as Fair Value through Profit and Loss Account ("FVTPL")
and valued accordingly as per Ind AS 109. As regards the retail portfolio, the same is classified as amortized
cost as per Ind AS 109 and assessed accordingly. The assessment of credit risk of the retail portfolio entails
estimations as to the likelihood of defaults occurring and of the associated loss ratios. The Company measures
credit risk for each class of loan assets using inputs such as Probability of Default (PD) and Loss Given Default
(LGD). PD and LGD are ascertained as per applicable standards culminating in Expected Credit Loss ("ECL").

Retail Business - (Rural and Urban Finance)

A combination of credit models along with policy rules are deployed as approved by the designated officials
for the respective product. The rules are regularly monitored and updated to ensure that the learnings from
the portfolio performance and changes in the economic environment are factored in to strengthen the credit
portfolio.

Trading Exposures

For debt securities in the trading portfolio, external rating agency credit grades are used for evaluating the
credit risk.

Expected Credit Loss ('ECL')

The Company prepares its financial statements in accordance with the IND AS framework. As per the RBI
notification, on acceptance of IND AS for regulatory reporting, the Company computes provision as per IND
AS 109 as well as per extant prudential norms on Income Recognition, Asset Classification and Provisioning
(IRACP). Where impairment allowance in aggregate for the Company under Ind AS 109 is lower than the
provisioning required under IRACP (including standard asset provisioning) for the Company, the difference is
appropriated from net profit or loss after tax, to a separate 'Impairment Reserve'. Any withdrawals from this
reserve shall be made only with prior permission from the RBI.

ECL allowances recognized in the financial statements also reflect the effect of a range of possible economic
outcomes, calculated on a probability weighted basis, based on certain economic scenarios. The recognition
and measurement of ECL involves the use of significant judgment and estimation. Forward looking economic
forecasts are used in developing the ECL estimates. The multi-variable regression framework is used to
establish a linkage between company's default rates and various macroeconomic variables like unemployment
rate, commodity price index, general government final consumption expenditure, domestic credit to private
sector, gross domestic product, gross capital formation, lending interest rate, final consumption expenditure
and farm reservoir levels amongst others. Three scenarios sufficient to calculate unbiased ECL are used -
representing the "most likely outcome" (the "Central" scenario) and two "less likely outcome" scenarios (the
"Upside" and "Downside" scenarios). Probability weights have been assigned to each scenario based on past
patterns observed in the multi variable regression process. However, for FY26-27, in the light of the recent
geopolitical conflicts and uncertainty, the management will not consider any reduction in ECL estimates that
may be arising through the Point in time (PIT) model outcome using the macro-economic variables.

Management oversees the estimation of ECL including:

(i) setting requirements in policy, including key assumptions and the application of key judgements

(ii) the design and execution of models; and

(iii) review of ECL results.

As required by Ind AS 109, a 'three-stage' model for impairment based on changes in credit quality since initial
recognition was built as summarized below:

• A loan asset that is not credit-impaired, on initial recognition, is classified in 'Stage 1' and has its credit
risk continuously monitored by Management. The company categorises loan assets as 'Stage 1' primarily
based on 0-30 Days Past Dues status.

• If a significant increase in credit risk ('SICR') since initial recognition is identified, the loan asset is moved
to 'Stage 2' but is not yet deemed to be credit impaired. (See note 1.10(i) for a description of how the
Company determines when a significant increase in credit risk has occurred). The company categorizes
loan assets as 'Stage 2' primarily based on 31-90 Days Past Dues status.

• I f the financial instrument is credit-impaired, the financial instrument is then moved to 'Stage 3'. (See
note 1.10(i) for a description of how the Company defines credit-impaired and default). The company
categorizes loan assets as 'Stage 3' primarily based on more than 90 Days Past Dues status.

(Refer note 48 for Stage wise gross carrying amount of loans and loss allowance provisioning).

The following are additional considerations for each type of portfolio held by the Company:

Retail Business- (Rural and Urban Finance)

Retail lending credit quality is determined on a collective basis based on a 12-month point in time ("PIT")
probability weighted PD for all loan asset that are not credit-impaired and for assets with SICR, lifetime
probability weighted PIT PD is used. PD for assets in Stage 3 are considered as 1.

A centralized impairment model summarizes the historical payment behaviors of the borrowers within a
retail portfolio for which data are used to build the PD estimates. For estimating PD, day-past-due (DPD)
status, vintage of customer as measured by the Month-on-Book (MOB) and/ or a few other product specific
parameters (Prime/Non-Prime customers, New Book/ Old Book split, etc.) are considered for segmenting the
portfolio to differentiate the default risk within the respective retail products.

LGD has been estimated for all the retail products using the defaulted accounts which are eventually closed
(either through normal repayments or through settlement/waivers) along with defaulted active accounts with
high DPD as of the end of the performance period allowing a reasonable window for collections post the
default. LGD is computed as average of 1 minus the ratio of net recoveries (i.e., total recoveries adjusted for
direct recovery costs) to the Principal Outstanding (POS) at the time of default., the average being computed
over the accounts considered for the LGD estimation. The PD and LGD rates are used to arrive at the ECL for
all stages of loan assets.

Exposure at Default (EAD)

EAD represents the expected balance at default, taking into account the repayment of principal and interest
from the Balance Sheet date to the date of default together with any expected drawdowns of committed
facilities.

Besides growth in the loan assets portfolio, increases in trading portfolio assets and financial assets at fair
value through the Statement of Profit and Loss have also contributed to the increase in the Company's net
exposure to credit risk. Investments in debt instruments are predominantly investment grade except where the
instrument is received in connection with loans granted.

Where collateral has been obtained in the event of default, the Company does not, ordinarily, use such assets
for its own operations and they are usually sold and off set against the outstanding loan assets.

The Company has invoked pledge of equity shares and non-convertible debentures ("NCD") in the companies,
pledged with the Company as collateral by the borrowers and these shares are being held by the Company as
bailee. (Refer note 38).

Concentration of exposure:

Concentrations of credit risk arise when a number of counterparties or exposures have comparable economic
characteristics, or such counterparties are engaged in similar activities or operate in the same geographical
areas or industry sectors so that their collective ability to meet contractual obligations is uniformly affected
by changes in economic, political or other conditions. The Company has established a diversified borrower
base as at March 31, 2026. The Company has put in place a framework of Risk Limits, which are monitored
on a quarterly basis to ensure that the overall portfolio is steered within the approved limits to minimize
concentration risk. The Risk Limits cover risk of concentration to a particular geography, industry, Company/
borrower or revenue counterparty of the borrowers etc. as are relevant to the respective product.

Market Risk Management:

Liquidity Risk:

This is the risk that the Company may be unable to service its contractual or contingent liabilities or support
its committed disbursements due to lack of adequate funding or liquidity.

Liquidity risk management in the Company is guided by the Board-approved Asset-Liability Management
('ALM') Policy, which provides the framework for the identification, measurement, monitoring and reporting of
liquidity risk arising from the Company's lending and borrowing activities. This risk is measured and managed
by setting up limits on structural liquidity gaps across various time-buckets and on relevant liquidity stock
ratios. Monthly reports on actual liquidity gaps against established limits are submitted to the Asset Liability
Management Committee (ALCO). The Company has been maintaining positive cumulative liquidity gaps for
all the time-buckets up to 1 year as a prudent risk management practice.

The Company manages liquidity risk through periodic stress testing and maintains a substantial liquidity
buffer. This buffer, designed to withstand a 30-day survival period under a severe stress scenario, includes
High-Quality Liquid Assets, Fixed Deposits, and Mutual Funds. The Company also continuously monitors its
Liquidity Coverage Ratio (LCR) above regulatory minimums and uses Early Warning Indicators (EWI) within its
Contingency Funding Plan to proactively address potential liquidity challenges. These EWIs are monitored on
a regular basis.

Further, RBI has issued final guidelines on Liquidity Risk Management Framework under Master Direction -
Reserve Bank of India (Non-Banking Financial Company- Scale Based Regulation) Directions, 2023. As per
the said guidelines, NBFC are required to publicly disclose the below information related to liquidity risk on a
quarterly basis. Basis the above, the disclosure on liquidity risk for L&T Finance Limited as at March 31, 2026
is given below:

Note:

• Commercial Paper for stock ratio is the Gross outstanding (i.e. Maturity amount).

• Other Short-term Liabilities has been computed as Total Short-term Liabilities less Commercial paper
less Non-convertible debentures (Original maturity of less than one year), basis extant regulatory ALM
guidelines.

Institutional set-up for Liquidity Risk Management:

The Company's Board of Directors is responsible for overseeing and managing all risks, including liquidity
risk, in the Company's business. The Board approves the governance structure, policies, strategy and the
risk limits for the management of liquidity risk. The Board of Directors approves the constitution of the
Risk Management Committee (RMC) for the effective supervision, evaluation, monitoring and review
of various aspects and types of risks, including liquidity risk, faced by the Company. The meetings of
RMC are held at quarterly interval. Further, the Board of Directors also approves constitution of Asset
Liability Committee (ALCO), which functions as the strategic decision-making body for the asset-liability
management of the Component from risk-return perspective and within the risk appetite and guard-rails/
limit approved by the Board. The main objective of ALCO is to assist the Board and RMC in effective
discharge of the responsibilities of asset-liability management, market risk management, liquidity and
interest rate risk management and also to ensure adherence to risk tolerance/limits set up by the Board.
ALCO provides guidance and directions in terms of interest rate, liquidity, funding sources, and investment
of surplus funds. ALCO meetings are held once in a month or more frequently as warranted from time
to time. The minutes of ALCO meetings are placed before the RMC and the Board of Directors in its next
meeting for its perusal/approval/ratification.

(vi) Disclosure on Liquidity Coverage Ratio

RBI has issued final guidelines on Liquidity Risk Management Framework for Non-Banking Financial
Companies and Core Investment Companies on November 04, 2019. As per the said guidelines, LCR
requirement shall be binding on all non-deposit taking systemically important NBFCs with asset size of
? 10,000 crore and above from December 1, 2020, with the minimum LCR to be 50%, progressively
increasing, till it reaches the required level of 100%, by December 1, 2024, as per the time-line given
below:

Foreign Exchange Rate Risk:

In the normal course of its business, the Company does not deal in foreign exchange in a significant
way. Any foreign exchange exposure on account of foreign exchange borrowings is fully hedged to
safeguard against exchange rate risk. The Company's treasury risk management policy covers the
framework for managing currency risk including hedging. The Company determines hedge effectiveness
for hedging instrument at the inception of the hedge relationship and through periodic prospective
effectiveness assessments to ensure that an economic relationship exists between the hedged item and
hedging instrument. The Company enters into hedge relationships where the critical terms of the hedging
instrument match with the terms of the hedged item, and so a qualitative and quantitative assessment of
effectiveness is performed.

Interest Rate Risk:

Interest rate risk, which arises from changes in market interest rates affecting the Company's Net Interest
Income (NII) is mitigated by the Company's ALM Policy, which stipulates Interest Rate Sensitive Gaps for all
the time-buckets. An Interest Rate Sensitivity Statement, prepared monthly and presented to ALCO, tracks
these gaps, specifically the mismatch between the Rate Sensitive Assets and Liabilities across various time
buckets.

Security Prices:

The Company's investment portfolios consist of government securities, corporate bonds and debentures.
To mitigate credit and interest rate risk, risk limits in the form of portfolio size limits, concentration limits
and mark to market (MTM) limit are stipulated. Early warning indicators in the form of alarm limits have
also been put in place. Reporting periodicity and escalation matrix upon the breach of alarm limits as well
as risk limits have been clearly defined. The Company does not invest in Equity stocks and therefore is not
exposed to equity price risk.

Note: "The Organisation for Economic Co-operation and Development (OECD) has released model rules
for a global minimum tax under the Pillar Two framework (Pillar Two model rules). The Company's ultimate
parent entity (UPE) i.e. Larsen & Toubro Limited has consolidated revenues exceeding the threshold
prescribed under the OECD framework, and accordingly the Group falls within the scope of Pillar Two.
The Pillar Two legislation has not been enacted by the Government of India, where the parent entity is
incorporated.

The Company does not operate in any overseas jurisdiction; accordingly, there is no impact from the
application of Pillar Two rules."

50 The Company utilizes accounting software equipped with an audit trail (edit log) feature to maintain its books
of account. This facility operated throughout the year for all transactions recorded within the software.

While comprehensive audit logs for direct database-level changes were fully enabled during the year, the
Company employed an alternate monitoring tool for such changes prior to that date. Furthermore, all audit
trail records have been preserved in accordance with statutory requirements for the retention of books of
account.

51 Exceptional item: Impact of social security codes (New Labour Codes):

Effective November 21, 2025, the Government of India consolidated 29 existing labour regulations into four
Labour codes, namely, The Code on Wages, 2019, The Industrial Relations Code, 2020, The Code on Social
Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020, collectively referred
to as the 'New Labour Codes'. The New Labour Codes has resulted in a one-time material increase in provision
for employee benefits on account of recognition of past service costs. Based on the requirements as per the
of New Labour Codes and relevant Accounting Standard, the Company has assessed and accounted the
estimated incremental impact as Exceptional Item in the results for the year ended March 31,2026 amounting
to R 28.43 crores (Net of tax R 21.27 crores). Upon notification of the related Rules to the New Labour
Codes by the Government and any further clarification from the Government on other aspects of the New
Labour Codes, the Company will evaluate and account for additional impact if any, determined in subsequent
periods.

Footnote: As per para 35 of of Master Direction - Reserve Bank of India (Non-Banking Financial Companies
- Income Recognition, Asset Classification and Provisioning) Directions, 2025, issued by Reserve Bank of
India vide circular no. RBI/DOR/2025-26/356 DOR.STR.REC.No.275/21.04.048/2025-26 - November 28, 2025
as amended., Where impairment allowance under Ind AS 109 is lower than the provisioning required under
Income Recognition, Asset Classification and Provisioning (IRACP) (including standard asset provisioning),
NBFCs shall appropriate the difference from their net profit or loss after tax to a separate 'Impairment Reserve'.
However total IND AS 109 impairment allowance is higher by ? 2,558.47 crore as compare to IRACP, hence
appropriation to impairment reserve is not required during the financial year.

Note : 1 This includes one-time restructuring implemented as prescribed in the notifcation no. RBI/2020-21/16 DOR.NO.BP.
BC/3/21.04.048/2020-21 Resolution Framework for COVID-19-related Stress and RBl/2021-22/31/DOR.STR.REC. 11
/21.04.048/2021-22 Resolution Framework - 2.0: Resolution of Covid-19 related stress of Individuals and Small Businesses
dated May 05, 2021.

2 Since the disclosure of restructured accounts pertains to section “Others", the first two sections namely “Under CDR
Mechanism" and “Under SME Debt Restructuring Mechanism" as per the format prescribed in the Reserve Bank of India
(Non-Banking Financial Companies - Financial Statements: Presentation and Disclosures) Directions, 2025 , company are
not included above.

53.8 Other Miscellaneous

i) Breach of Covenant- During the financial year ended March 31, 2026, there are no instances of breach
of covenants of loan availed or debt securities issued (applicable if any) by the company.(Previous year: Nil)

ii) Overseas Assets (for those with Joint Ventures and Subsidiaries abroad)- The company does not
have any joint venture or subsidiary abroad, hence not applicable.

iii) Off-balance Sheet SPVs sponsored- The company does not have any off-balance Sheet SPVs sponsored,
hence not applicable.

iv) Credit Default Swaps- The company has not undertaken any credit default swaps transaction during the
financial year ended March 31, 2026. (Previous year: Nil)

v) Currency Options- The company has not undertaken any currency options transaction during the
financial year ended March 31, 2026. (Previous year: Nil)

vi) Currency Futures- The company has not undertaken any currency futures transaction during the financial
year ended March 31,2026. (Previous year: Nil)

vii) Area of Operation-The company operates in India and does not have any overseas joint ventures and
subsidiaries.

viii) Remuneration of Directors- Please refer the note no. 32 of related party transactions.

ix) Net Profit or Loss for the period, prior period items and changes in accounting policies- There are
no prior period items which are impacting company's current year profit and loss.

x) Sales Out Of Amortised Cost Business Model Portfolios- The Company's policy for sales out of
amortised cost business model portfolios is given at note 1.10 (i)(e) of material accounting policies.

xi) Drawn down from reserves- No draw down from reserves during the financial year ended March 31,
2026. (Previous year: Nil)

xii) Penalties imposed by RBI and other regulators- No penalties have been imposed by RBI or other
regulators during the financial year ended March 31, 2026. (Previous Year: Nil)

xiii) Postponement of revenue recognition- There are no circumstances under which revenue recognition
has been postponed in the financial year ended March 31,2026 (Previous year: Nil).

54 The following additional information (other than what is already disclosed elsewhere) is disclosed

in terms of amendments dated March 24, 2021 in Schedule III to the Companies Act 2013 with effect

from 1st day of April, 2021:-

(a) There is no proceeding initiated or pending against the company during the year for holding any benami
property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(b) The company is not declared wilful defaulter by any bank or financial Institution or any other lenders.

(c) Being a systemically important non-banking financial company registered with the Reserve Bank of India
as per Reserve Bank of India Act, 1934 (2 of 1934), the provisions prescribed under clause (87) of section
2 of the companies Act 2013 read with Companies (Restriction on number of Layers) Rules, 2017 is not
applicable to the company.

(d) There is no scheme of arrangements has been approved during the year by the Competent Authority in
terms of sections 230 to 237 of the Companies Act, 2013 other than disclosed under note 53.

(e) There is no transaction that has not been recorded in the books of accounts and surrendered or disclosed
as income during the year in the tax assessments under the Income Tax Act, 1961.

(f) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(g) The Company has obtained borrowings from banks or financial institutions on the basis of security of
current assets and quarterly returns or statements of current assets filed by the Company with banks or
financial institutions are in agreement with the books of accounts.

(h) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any
other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries)
with the understanding (whether recorded in writing or otherwise) that the Intermediary shall :

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by
or on behalf of the Company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

(i) The Company has not received any funds from any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Company
shall :

(i) 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

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

(j) There are no creation or satisfaction of charges as at March 31, 2026 pending with ROC beyond the
statutory period.

(k) The Company has utilised all the borrowings for the purpose for which they have been borrowed.

55 There are no due and outstanding amount to be credited to Investor Education & Protection Fund as at March
31,2026.

56 Previous year figures have been regrouped/reclassified wherever necessary, to make them comparable with the
current year figures.

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

ICAI FRN: 000515S ICAI FRN: 006711N/N500028

P.S. Kumar Vikas Kumar S. N. Subrahmanyan Sudipta Roy

Partner Partner Non-Executive Chairman Managing Director &

Membership No. 015590 Membership No. 075363 (DIN: 02255382) Chief Executive Officer

(DIN: 08069653)

Sachinn Joshi Apurva Rathod

Chief Financial Officer Company Secretary

Membership No: F13729

Place : Mumbai Place : Mumbai Place : Mumbai

Date : April 24, 2026 Date : April 24, 2026 Date : April 24, 2026