B. The Company has received an order dated December 27, 2019 for the Assessment year 2014 - 15 from the Office of Assistant Commissioner of Income tax raising a demand of Rs. 4,24,355 thousand towards Income tax and Interest payable towards amount of unexpired risk reserve not being appropriated in the Profit and Loss account. The Company has challenged the order before Commissioner of income tax (Appeals), while having taken a stay for the demand from Hon'ble High Court of Madras subject to payment of 10% tax amounting to Rs. 25,110 thousand. In the opinion of the company, both on law and facts, the said demands are not sustainable and hence no provision is considered necessary in the books.

C. The Company filed its return of income on 4th March 2022 for Assessment Year 2021-22 opting for benefit of lower tax rate at 22% under section 115BAA of the Income Tax Act. In the income tax return the option for claiming the lower rate was opted by the company. However as per section 115BAA, there is a requirement to file Form 10-IC for claiming the lower tax benefit, which was inadvertently not filed. The department processed company's return with the normal rate of tax at 34.94% which resulted in a higher tax liablity and short refund to the extent of Rs 2,35,609 Thousands. The company had filed with CBDT, the application under section 119(2)(b) of Income Tax Act, for Condonation of delay in filing of Form 10-IC. The company has also filed an appeal with Commissioner of Income tax (Appeals) on 1st October,2022 against the intimation order rejecting the option for lower rate of tax.

Goods and Service Tax (GST):

D. The Company received on 23rd March 2022, GST Audit Report from Uttar Pradesh GST department for the financial year 2017-2018 on 23rd March 2022 and intimated liability of Rs. 39,122 thousand along with Interest and penalty for excess input availed and short payment of output tax liability by the company. The department had issued demand order on suo moto basis without giving opportunity to be heard to company. The company has submitted a detailed reply to the Joint commissioner audit stating that there is no excess input availed and there is no short payment of tax. In the view of the Company, as advised by the counsel, the decision is expected to be in favor of the Company.

E. The Company paid Rs. 80,000 thousand under protest pursuant to GST proceedings on account of alleged ineligible input tax credit claim during the period July 2017 to March 2022. The Company has been advised that it would not be liable to pay the said amounts. Accordingly, the Company has treated the amount already paid as deposit under "Advances and Other Assets" as at March 31,2023. On April 06, 2023 the company has received intimation of liability under section 74(5) amounting to Rs. 2,39,943 thousands. The Company has responded to this intimation on April 15, 2023.

Show Cause Notice:

The Payment of Bonus Act was amended with retrospective effect and resulted in increasing the bonus liabilities. The Company is of the view that retrospective payment of Bonus is not appropriate and accordingly for bonus computation such retrospective amendment has not been taken in consideration. The additional liability on account of retrospective amendment is Rs. 14,831 thousands (Year Ended Mar 31, 2022: Rs. 14,831 thousands). The retrospective amendment is being challenged by various parties in the High Court and based on the final outcome on determination of the court cases would be accounted for on that date.

5.1.2 The assets of the Company are free from all encumbrances except for deposits of Rs. 44,898 thousand (Year Ended Mar 31, 2022: Rs. 20,657 thousands) with the courts against disputed claims. Pending disposal of the case, in the opinion of the Company the said amount is considered good and recoverable.

Claims outstanding data excludes IBNR. The claims were outstanding predominantly due to non-submission of essential documents by the insured/Hospitals. Claims settled and remaining unpaid for more than six months is Rs. Nil (Year Ended Mar 31,2022 Rs. Nil).

Claims where the claim payment period exceeds four years:

As per circular F&A/CIR/017/May-04, the claims made in respect of contracts where claims payment period exceeds four years, are required to be recognised on actuarial basis. Accordingly, the Appointed Actuary has certified assuming 'NIL' discount rate.

5.1.5 Premium

All premiums, net of Re-insurance are written and received in India.

No premium income is recognized on varying risk pattern.

5.1.9 Allocation of expenses

The company has allocated expenses of management as per the policy approved by the Board of Directors. Expenses such as Commission payable to Agents, Brokerage, etc. which are based on premium procurement for different segments are directly allocated to each segment on actual incurred basis. Other Administrative expenses, net of transfer to claims cost and incentive payable to field staff which cannot be directly attributed and allocated to any segment are apportioned on the basis of Gross Premium written for each segment.

During the year, the company has transferred from Operating Expenses (Ref: Schedule 4 of the Financial Statements under "Others - In House Claims Processing Cost") to Claims cost an amount of Rs. 12,93,912 thousands (Year Ended March 31, 2022: Rs. 11,43,258 thousands) being 1% of the gross premium (excluding co-insurance inward) pertaining to Health & Personal Accident (PA) segment towards In House Claims processing expenditure based on the Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers transacting General or Health Insurance business) Regulations, 2016.

C) Defined Benefit Plan - Employee Goodwill Gesture scheme

The Company has introduced new other long term employee benefits - Goodwill gesture scheme payable to employee above certain grade which will enable them to draw a lump sum amount in particular time period and balance when they leave the Company at retirement. The Scheme is purely a Goodwill Gesture from the Company and it cannot be claimed as a matter of right by an employee. The Company has absolute discretion to alter, amend or withdraw the scheme at any time without notice. The Company has determined the liability on the basis of Actuarial valuation.

D) Employee Stock Option plan (ESOP)

The Company has introduced Employee Stock Option plan (ESOP 2019) in the financial year 2019-20 effective from August 6, 2019(date of grant). The Company has granted Stock Options to employees in compliance with the Securites and Exchange Board of India ( Share Based Employee Benefits and Sweat Equity) Regulations 2021. The ESOP Plan 2019 was modified pursuant to the resolutions passed by the Board of Directors of the company in the meeting held on May 23, 2021, September 28, 2021 and January 25, 2022 and by the Shareholders of the Company in an extra ordinary general meeting held on July 16, 2021 , October 4, 2021 and March 03, 2022. Under the ESOP 2019, the company has given options to eligible employees to acquire equity share in the Company. The options have been granted under various tranches.

During the year ended as at March 31, 2023 the company had granted 21,20,104 No. of options (Year Ended March 31, 2022: 41,39,713 Options) which will vest over a period of 5 years in the ratio 20:20:20:20:20 starting at the end of one 1 year from the date of grant.

During the financial year 2020-21, the Company has obtained approval from IRDA via Ref 75/IRDAI/HLT/A&R/SHAI and introduced Employee Stock Option plan, 2021 (ESOP 2021) from December 02, 2021 pursuant to the resolution passed by the Board of director in the meeting held on November 11,2021 and by shareholder of the company in Extra ordinary general meeting held on November 11,2021 . Under the ESOP Plan 2021, the company had granted 25,00,000 Numbers of Option to Mr. Jaganathan, Chairman and Chief Executive Officer which will vest at the end of 1 year from the date of grant.

The Company has adopted intrinsic value method for computing the compensation cost of options granted. Where ever the exercise price is equal to the fair value of share on the date of grant, the value of options is Nil and hence no compensation cost is recognized in the books.

Out of the ESOP 2019 options issued up-to the Year ended March 31,2023: 7,40,389 No. of Options (Net of Withdrawn Option) (Year Ended March 31,2022: 7,95,189 Options), were issued for exercise price which is less than the fair value of the option. Therefore, the corresponding compensation cost of Rs. 12,710 thousands (Year Ended March 31,2022: Rs 22,357 thousands) is charged to profit and loss accounts.

Out of the ESOP 2021 options issued up-to the Year ended March 31, 2023: Nil (Net of Withdrawn Option) (Year Ended March 31,2022: 25,00,000 Options), were issued for exercise price which is less than the fair value of the option. Therefore, the corresponding compensation cost of Rs 14,93,493 thousands (Year Ended March 31,2022: Rs 7,31,507 thousands) is charged to profit and loss accounts.

The managerial remuneration to Managing Directors includes Rs. 9,669 thousands (PY : Rs. 26,597) being incremental remuneration, which has been approved by Board, for which approval by IRDAI is under process.

During the Year ended March 31,2022, 25,00,000 shares were issued as ESOP to Chairman & CEO at face value of Rs. 10 per share to be vested over a period of 12 months. As per Initial public offer issue price, fair value was Rs. 900/- per share and the issue price was Rs. 10. The difference value of Rs 22,25,000 was accounted on a proporationate basisfor the Year ended March 31,2023, of Rs 14,93,493 thousands ( PY : Rs 7,31,507 thousands) as 'Compensation Cost' in the Profit & Loss account.

5.1.15 Summary of Financial Statements for five years & Ratio Analysis:

A. A summary of Financial Statements and Accounting Ratios as per the formats prescribed by the IRDAI in its circular dated April 29, 2003 is provided in Annexure 2 and Annexure 3

The income tax refund receivable of Rs.2,35,609 thousands (refer note no. 5.1.1 C) has been considered as part of eligible assets for the purpose of the calculation of Available Solvency Margin (ASM) for the Year Ended March 31, 2023.

5.2 Other disclosures:

5.2.1 Basis used by the Actuary for determining provision required for IBNR (including IBNER) liability as at March 31,2023 for all lines of business has been estimated by the Appointed Actuary in compliance with the guidelines issued by IRDAI from time to time and the applicable provisions of the Guidance Note 21 issued by the Institute of Actuaries of India.

Pursuant to IRDAI regulation of Asset, Liabilities, and Solvency margin of General Insurance Business Regulations 2016 (IRDAI/Reg/7/119/2016 dated April 7, 2016); claim reserves are determined as the aggregate amount of Outstanding Claim Reserve and Incurred but Not Reported (IBNR) claim reserve for the lines of business as applicable to the company.

5.2.2 Provision for Free Look period

The provision for Free Look period of Rs. 3,500 thousands (Year Ended March 31,2022: Rs. 3,500 thousands) is duly certified by the Appointed Actuary.

5.2.10 Terms of Borrowings

Non- Convertible debentures

The Company had issued Non-convertible debentures for Rs. 2,500,000 thousands on private placement basis during the financial year 2017-18 in two tranches of Rs. 2000,000 thousands and Rs. 5,00,000 thousands at an interest rate of 10.25% and 10.20% respectively payable annually and redeemable in 7 years. These Non-convertible debentures had a Call option after 5 years. These Non-Convertible debentures have been redeemed during the Financial Year 2022-23 with due approval of the regulatory authority.

As on September 29, 2021, the Company had issued Listed Non-convertible debentures for Rs. 4,000,000 thousands on private placement basis at an interest rate of 8.75% payable annually and redeemable in 7 years.

As on October 28, 2021, the Company had issued Listed Non-convertible debentures for Rs. 700,000 thousands on private placement basis at an interest rate of 8.75% payable annually and redeemable in 7 years.

During the year ended on March 31, 2023 the Company has incurred interest on non-convertible debentures to the extent of Rs. 5,30,454 thousands (Year Ended March 31,2022: 4,56,620 thousands)

Amortization of premium pertaining to revenue a/c and the profit & loss a/c have been adjusted against Interest, Dividend & Rent credited to the respective accounts.

5.2.12 During the financial year under review, in respect of Expenses of Management, the company has not exceeded the sub segment limits prescribed under section 40C of The Insurance Act 1938, read with Insurance Regulatory and Development Authority of India (Expenses of Management of Insurers transacting General or Health Insurance business) Regulations, 2016.

5.2.18 Investor Education & Protection Fund:

For the year ended March 31,2023, the company has transfered Rs. NIL (previous year Rs. NIL) to the Investor Education & Protection Fund.

5.2.19 The Indian Parliament had approved the Code on Social Security, 2020 which could impact the contributions by the Company towards Provident Fund and Gratuity. The Company will complete its evaluation once the Rules are notified and will give appropriate impact in the financial statements in the period in which the Code and related Rules becomes effective.

5.2.20 The Company has formed Steering committee of Department Heads to implement Indian Accounting Standards (Ind AS). The Steering committee meets regularly to discuss and take forward the implementation of Ind AS. The Company has appointed a Chartered Accountancy firm to assist in completing the impact analysis of various IND AS applicable to insurance companies. Senior Employees of the Company have attended training program on Ind AS 117 - Insurance Contracts conducted by Institute of Actuaries of India and Institute of Chartered Accountants of India