Dear Members,

Directors of your Company take great pleasure in presenting the 21st Annual Report on the business and operations of your Company and the Audited Financial Statements for the financial year ended March 31, 2022.

FINANCIAL RESULTS:

Pursuant to the notification dated February 16, 2015 issued by the Ministry of Corporate Affairs, the Company has adopted the Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 w.e.f. April 01, 2016. The performance of the Company for the FY 2021-22 is summarised herein below:

RESULT OF OPERATIONS:

The consolidated total income increased from 50,792.46 million to 59,217.08 million, an increase of 16.59% over the previous financial year. The consolidated Net Profit After Tax increased from

3,616.77 million to 5,365.30 million, an increase of 48.35% over the previous financial year. The detailed analysis of the consolidated results forming part of the Management Discussion and Analysis Report is provided separately in the Annual Report.

The standalone total income increased from 13,529.55 million to 16,227.56 million, an increase of 19.94% over the previous financial year. The standalone Profit After Tax increased from

3,666.53 million to 3,875.89 million, an increase of 5.71% over the previous financial year.

INCREASE IN SHARE CAPITAL:

Earlier, Firstsource Solutions Limited Employee Stock Option Scheme 2003 (hereinafter referred to as the "ESOS 2003") provided for its implementation through primary issuance of the Company's shares to the employees of the Company. However, with a view to ensure better efficacy and administration of the ESOS 2003, it was proposed that the ESOS 2003 can be dealt with and implemented through trust route. Accordingly, during the year, your Company implemented the ESOS 2003 through trust route i.e., Firstsource Employee Benefit Trust, to align the interests of its employees with the long-term interests of the Company by motivating the employees with incentives and reward opportunities under the ESOS 2003 and create a sense of ownership and participation amongst the employees in the sustained growth of the Company.

Your Company issued/ allotted 891,610 equity shares of the face value of 10/- each on the exercise of stock options under ESOS

2003. Consequently, the outstanding, issued, subscribed and paid-up capital of the Company has increased from 696,099,216 shares to 696,990,826 shares of 10/- each aggregating to 6,969.90 million as on March 31, 2022.

GLOBAL OPERATION CENTERS:

The Company, on a consolidated basis has 43 global operation centers as on March 31, 2022. The centers are located across the US, the UK, India, the Philippines and the Mexico. 15 of the Company's operation centers are located in Chennai (2), Mumbai (3), Bangalore (4), Trichy (2) and 1 each in Pondicherry, Hyderabad, Indore & Vijayawada cities in India, 16 in the US, 9 in the UK, 2 in the Philippines and 1 in Mexico.

During the year, the Company incurred capital expenditure of 850.30 million mainly towards refurbishment and maintenance of operation centers, technology upgrade and setting up of new operations centers.

QUALITY INITIATIVES:

The Company follows global best practices for process excellence and the quality framework is based on COPC principles. The Company uses innovative techniques like Speech & Text Analytics, Robotic Process Automation and Intelligent Action Board to drive improvements across. Also, as part of the Quality Management System, the Company has embraced ISO 9001:2008. The Company continues to follow process improvement methodologies like Six Sigma, Lean and Kaizen.

AWARDS AND ACCOLADES:

The Company received the following awards and accolades during the year.

UiPath Automation Excellence Awards 2021

Won an award for ‘Best Citizen Developer Program' at the 2021 edition.

European Contact Centre & Customer Service Awards 2021

Won Bronze Award in the Best Small Customer Service Team category.

Welsh Contact Centre Awards 2021

Won awards in Best Outsourced Contact Centre category and Best Trainer category for Jack Pengelly-Ivins from the Capability Development Team.

Asia Pacific HRM Congress 2021

Won in four categories: Innovation in Retention Strategy; Best Use of CSR Practices; Innovation in Recruitment; and Best Service Provider in HR.

Contact Centre Network Northern Ireland Awards 2021

Our Talent Development Team won the People Development Award, while Firstsourcers Julia O'Neill won the Support Manager of the Year award and Christopher Phillips won a Silver in the Trainer of the Year category.

UK National Contact Centre Awards 2021

Sarah Johnson won Gold and Anne MacGowan won Bronze.

2021 Powerful Women of Mortgage Banking

Dawn Elmore, Head of Strategic Initiatives, Sourcepoint named one of ‘2021 Powerful Women of Mortgage Banking' by the Mortgage Banker magazine in the US.

Women of Influence 2021

Firstsource's Vice President, Client Services, Sourcepoint was honored as a ‘Woman of Influence 2021' by the HousingWire magazine in the US.

UK Complaints Handling Awards 2022

Gold in the Financial Services category alongside our client Post Office.

Positioned as a ‘Leader' NelsonHall in its ‘Intelligent Automation in Banking NEAT 2021' report.

Leader in Everest Group's Mortgage Operations PEAK Matrix?.

Ranked as top Business Process Services (BPS) provider in its ‘BPS Top 50™' report by Everest Group. Firstsource was also placed as Top 10 Service Providers by Growth by the industry research firm.

Received Investors in People (IIP) Gold accreditation for its UK operations.

Named a Leader in the Payer Digital Transformation Services category and a Rising Star in the Payer Business-Processes-as-a-Service (BPaaS) Services category by Information Services Group (ISG) in their quadrant report on Healthcare Digital Services – ISG Provider Lens™.

Included in 2022 Bloomberg Gender-Equality Index for its commitment to transparency in gender-data reporting and creating a workplace conducive for diverse talent to succeed.

Leader in Everest Group's Healthcare Payer Operations PEAK Matrix? Assessment 2022.

Ranked #1 in the 2022 Best in KLAS?: Software & Services Report, and noted as a leader in the Eligibility and Enrollment Services category.

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with Section 129(3) of the Companies Act, 2013 and in view of notification issued by the Ministry of Corporate Affairs on Ind-AS, the Company has prepared consolidated financial statements of the Company and all its subsidiaries as per Ind-AS, which forms part of this Annual Report.

DIVIDEND:

The Board approved and declared an interim dividend on February 04, 2022 at the rate of 35% i.e. 3.50 per share of 10/- each.

The interim dividend for FY 2021-22 aggregated to 2,219.95 million (net of applicable TDS).

The Dividend Distribution Policy of the Company was approved by the Board at its meeting held on August 08, 2017 and is available on the Company's website at https://www.firstsource.com/wp-content/uploads/2021/12/Dividend-Distribution-Policy.pdf.

TRANSFER TO RESERVE:

The Board of Directors of the Company (hereinafter referred to as the "Board") have not recommended transfer of any amount of profit to reserves during the year under review. Hence, the remaining amount of profit for the financial year under review has been carried forward to the Statement of Profit & Loss.

HUMAN RESOURCES:

On a consolidated basis, the Company has 26,557 employees as of March 31, 2022.

PARTICULARS OF THE EMPLOYEES AND RELATED DISCLOSURES:

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 ("Act") read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed as Annexure I.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this Report. Further, the Report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

PUBLIC DEPOSITS:

During the year under review, your Company has not accepted any deposits under Section 73 of the Act, and as such, no amount on account of principal or interest on public deposits was outstanding as of March 31, 2022.

PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES AND SECURITIES:

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the notes to the standalone financial statements. (Please refer to Note No. 6 and 31 to the standalone financial statements).

CREDIT RATINGS:

During the year under review, the rating given by CARE and CRISIL are mentioned herein below:

(i) CARE Rating:

(ii) CRISIL Rating:

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

The Company seeks to be a good corporate citizen in all aspects of its operations and activities. The Company commits to operating in an economically, socially and environmentally responsible manner whilst balancing the interests of diverse stakeholders.

Our CSR Policy is governed and guided by our Group's corporate vision to enable inclusive growth and our aspiration to be India's leading business group serving multiple market segments, for our customers, shareholders, employees and community. The Company seeks to undertake programmes in the areas of Healthcare, Education, Environment, Arts & Culture, Promotion of Sports as well as support initiatives towards Gender Equality and Empowerment of Women.

The Board constituted a Corporate Social Responsibility (CSR) Committee, pursuant to Section 135 of the Act, consisting of Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, Mr Subrata Talukdar and Mr Pradip Roy (ceased to be an Independent Director w.e.f. July 29, 2021 by efflux of time), Mr Anjani K. Agrawal (appointed as a member w.e.f. July 30, 2021) as its members. The CSR Committee meets at least once in a year. During the year under review, the Committee met once. The details of CSR Committee and its meetings are given in Report on Corporate Governance forming part of the Annual Report. The CSR Committee has framed and formulated a CSR Policy indicating the activities to be undertaken by the Company, in accordance with Schedule VII of the Act and the Companies (Corporate Social Responsibility Policy) Rules, 2014 issued under the Act. The same has also been approved by the Board. The CSR policy is available on the website of the Company at the link https://www.firstsource.com/wp-content/uploads/2022/03/ CSR-Report-FY21-22.pdf.

The Annual Report on CSR Activities, as stipulated under the Act and the SEBI (LODR) Regulations, 2015 forms an integral part of this Report and is appended as Annexure II. The details of focus areas of engagement as mentioned in the CSR Policy of the Company are mentioned in the said Annual Report on CSR Activities.

The CSR activities, as per the provisions of the Act, may also be undertaken by the Company through a registered trust. Accordingly, "RP – Sanjiv Goenka Group CSR Trust" ("Group CSR Trust") was formed along with other Group Companies to pursue CSR activities as mentioned in the CSR Policy of the Company.

During the year, the Company has spent an amount of 15.55 million on CSR activities, as mentioned in the CSR Policy. The Company has been contributing a portion of amount of its CSR obligation every year for the project to set up an International Baccalaureate School in Kolkata taken up by the Group CSR Trust which is as an ‘ongoing project' as defined in the Companies (Corporate Social Responsibility Policy) Rules, 2014. Accordingly, the Company had transferred 40.16 million to Unspent CSR

Account for the above mentioned cause towards CSR expenditure for FY 2021-22.

The CSR at the Company is a platform for giving back to the communities in which we live and work. The Company looks to engage employees in focus areas where possible through programmes such as employee volunteering, payroll giving, participating in fundraising events, partnering with NGO's and response to disasters.

Volunteers did live translation in Tamil, Hindi, Kannada and Telugu for the "Living Beyond Barriers", a guidance session for persons with disabilities to live life on their terms;

On the occasion of World Disability day volunteers and leaders took part in the Tactile Library preparation at our Chennai, Bangalore, Mumbai, Gandhinagar and Hyderabad offices;

To mark contribution towards environment, volunteers from Chennai, Mumbai and Bangalore planted over 6000 trees across and involved in various beach cleanup activities;

Volunteers supported Govt. school students by enabling various skill development sessions by giving their time and knowledge. Experts from HR team conducted mock interview & resume building sessions to graduates from Youth Empowerment Programs. We also had leaders conducting career guidance and mentoring session to Govt. school students;

Volunteers took part in varied virtual awareness sessions on My Body is My Body, Sign language, Cyber safety, paper bag making, home composting, bio-fertilizer, Tangram making, Women rights and safety;

As part of International Women's Day, volunteers participated in various initiatives to empower women beneficiaries like

- Virtual Menstrual hygiene session for the girl students from underrepresented communities, spreading awareness through digital poster making on strong women icons, financial literacy and motivational sessions by women leaders.

On the occasion of International Volunteers Day, volunteers from Cebu and Manila took part in the session on Destinayson, a session for volunteers about What is Volunteering;

Donated non-perishable daily essentials to women and children who were in need;

Volunteers supported COVID-19 vaccination awareness campaign and also helped in distribution of Food Starter Kits and health kits in Cebu and Manila;

Volunteers supported in donation of food and essentials to community pantry for the survivors of human trafficking.

Salvation Army for a Bedroom and Bathroom item drive;

Volunteers donated books and sanitizers to schools in need, as part of feed and read initiative;

"Fill Your Backpack" special collection drive was enabled by our volunteers to support back to school program at US

Volunteers involved in Blood donation drive at various US offices;

Volunteers participated in a virtual expert session to spread awareness on breaking the biases against women and to have inclusion in diversity;

As part of Black History Month, volunteers from the US recorded stories for Black protagonists.

Volunteers enabled food bank collection for South Belfast Foyle, Southampton Foodbanks;

Volunteers involved in raising funds for GLOW & EDA and donating to JustGiving;

Volunteers participated in hair shave and hair donation for the Little Princess Trust in support of cancer patients;

Volunteers participated raffle for Mothering Sunday to buy goods for Women's Aid;

As part of International Women's Day, volunteers from the UK created flashcards on family planning and safe pregnancy. These cards were used by Goodera, a Global organization to spread awareness among rural women in Kenya;

As part of International Women's Day celebrations, volunteers created digital posters on strong women icons who fought for equality and women's rights throughout history. These posters were used by Goodera on their social media pages to inspire fellow women.

GLOBAL EMPLOYEE GIVING:

During last financial year four mega payroll donation was held:

COVID Fundraiser, 20 Years of Partnership with Sky Fundraiser, Compassion for Cebu Fundraiser and UK Payroll Giving Program

COVID Fundraiser: During most peak covid19 second wave our employees opened their heart and wallet and donated around 4 million to help colleagues and communities. Around 735 employees donated for this campaign.

20 Years of Partnership Campaign: Firstsource completes 20 glorious years of partnership with UK based telecommunications and media giant. This partnership was celebrated with a purpose where 1301 employees donated 0.46 mllion which was spent in various causes such as helping children homes with groceries, hygienic kits, helping needy patients get cataract surgeries, helping women's in slum get livelihood opportunities.

UK Payroll Giving: To enable volunteers to give back to society, through payroll giving program 611 UK employees contributed ?34,990.00 for the Financial year March 2021-April 2022. This amount was donated to the charities of employee choice.

SPECIAL PROJECTS:

Last year as COVID was rapidly spreading across world, one thing was very much needed that is remote helplines to follow and help COVID patients. Project Stepone, a volunteer led NGO started an unique project to support Govt by setting virtual helplines across India. Firstsource as a BPM giant showcased their business acumen by providing expertise as well as full time paid volunteers to support government to manage COVID better.

Project StepOne 2nd Wave Helpline: Around 110 employees where half were hired specifically for this project worked for 78 Days doing 10000~ critical calls throughout and helping Bangalore zone in managing COVID.

Project StepOne 3rd Wave Helpline: Integrating inclusion and CSR, a team of 5 LGBQT resource were hired who are currently supporting StepOne team in managing 3rd Wave as well as managing Vaccination Program.

Chennai Volunteers (CV) Helpline: Tiruvallur District Collector requested our non-profit partner to help with volunteers who can monitor COVID patients on a daily basis and provide necessary support. An exclusive 5 member LGBQT batch was setup to support them for two months. Around 5500 Calls were made and request and escalations were relayed to District Health Officials.

RISK MANAGEMENT:

The Company has implemented a comprehensive and fully integrated ‘Enterprise Risk Management' framework in order to anticipate, identify, measure, manage, mitigate, monitor and report the principal risks and uncertainties that can impact its ability to achieve its strategic business objectives.

The Enterprise Risk Management drives a common integrated view of risks and optimal risk mitigation responses. This integration is enabled by alignment of Risk Management and Internal Audit methodologies and processes in order to maximize enterprise value of the Company and ensure high value creation for our stakeholders over a time.

The details of the ‘Enterprise Risk Management' framework with details of the principal risks and the plans to mitigate the same are given in the ‘Risk Management Report' section of the ‘Management Discussion and Analysis Report' which forms part of this Annual Report.

Further in view of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), effective April 01, 2019, the Board constituted a Risk Management Committee on February 04, 2019 to monitor & mitigate the Risk.

INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls with reference to financial statements. Such internal financial controls over financial reporting are operating effectively and the Statutory Auditor has also expressed their opinion on the same in the Annexures to the Auditors Report.

WHISTLE BLOWER POLICY:

The Company has a Whistle Blower Policy (the"WB Policy") with a view to provide vigil mechanism to Directors, Employees and other Stakeholders to disclose instances of wrongdoing in the workplace and report instances of unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The WB Policy also states that this mechanism provides for adequate safeguards against victimization of Director(s)/ Employees who avail of the mechanism and also provides for direct access to the Chairperson of the Audit Committee in exceptional cases. The WB Policy has been posted on the website of the Company and the details of the same are provided in the ‘Report on Corporate Governance' forming part of this Annual Report.

The WB Policy is available on the website of the Company at https://www.firstsource.com/wp-content/uploads/2022/02/ WHISTLE-BLOWER-POLICY-Jan-2022.pdf

PREVENTION OF SEXUAL HARRASSMENT POLICY:

The Company has a ‘Prevention of Sexual Harassment Policy' in force in compliance with the requirements of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The objective of this Policy is to ensure a safe, secure and congenial work environment where employees deliver their best without any inhibition, threat or fear. The Company has Zero Tolerance to any form of harassment especially if it is sexual in nature. The complaints filed under the Policy are reported to the Audit Committee at its quarterly meetings with details of action taken thereon.

It is confirmed that during the year under review, the Company has complied with applicable provisions in relation to sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, including the provisions relating to the constitution of Internal Complaints Committee under the said Act.

BOARD OF DIRECTORS:

During the year under review, the following are the changes in the Board of Directors:

Mr Shashwat Goenka (DIN: 03486121) retires by rotation and being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting ("AGM").

Mr Charles Richard Vernon Stagg (DIN: 07176980) ceased to be an Independent Director on account of completion of his term on May 05, 2022. The Board places on record its appreciation towards valuable contribution made by him during his tenure as a Director of the Company.

The Board appointed Ms Vanita Uppal (DIN: 07286115) as an Additional Director (Non-Executive, Woman Independent) on the Board of the Company w.e.f. May 05, 2022. She holds officeuptothisAGM.TheBoardrecommendsappointmentof Ms Vanita Uppal as an Independent Director for a term of three (3) consecutive years, effective from May 05, 2022 for approval of members of the Company at this AGM. The Company has received the declaration from Ms Vanita Uppal confirming that she meets the criteria of independence as prescribed under Section 149(6) of the Act.

All the Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act.

Board and Audit Committee Meetings:

During the FY 2021-22, the following four (4) Board Meetings were held on:

1. May 11, 2021

2. July 29, 2021

3. November 10, 2021

4. February 04, 2022

During the FY 2021-22, the following four (4) Audit Committee Meetings were held on:

1. May 11, 2021

2. July 28 & 29, 2021*

3. November 10, 2021

4. February 03, 2022

*Audit Committee Meeting held on July 28, 2021 was adjourned to July 29, 2021.

Time gap between any two meetings was not more than one hundred twenty (120) days.

The full details of the said meetings are given in the ‘Report on Corporate Governance' forming part of this Annual Report.

The Familiarisation Programmes for Independent Directors:

The Company has put in place a system to familiarise its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. The details of such familiarisation programmes are put up on the website of the Company at the below link: https:// www.firstsource.com/wp-content/uploads/2021/12/Policy-on-familiarisation-of-Independent-Directors.pdf.

(i) Performance Evaluation of the Independent Directors and Other Individual Directors:

The Company has framed a policy for Appointment of Directors and Senior Management and Evaluation of Directors' Performance ("Board Evaluation Policy"). The said policy sets out criteria for performance evaluation of Independent Directors, other Non-Executive Directors and the Executive Directors.

Pursuant to the provisions of the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Board carries out the performance evaluation of all the Directors (including Independent Directors) on the basis of recommendation of the Nomination and Remuneration Committee and the criteria mentioned in the Board Evaluation Policy. The Board decided that the performance evaluation of Directors should be done by the entire Board of Directors excluding the Director being evaluated and unanimously agreed on the following assessment criteria for evaluation of Directors' performance:

Attendance and active participation in the Meetings;

Bringing one's own experience to bear on the items for discussion;

Governance covering Awareness and Observance; and

Value addition to the business aspects of the Company.

(ii) Performance Evaluation of Executive Director:

The performance of the MD & CEO is evaluated on the basis of achievement of performance targets/ criteria given to him by the Board from time to time.

(iii) Performance Evaluation by the Board of its own performance and its Committees:

The performance of the Board is evaluated by the Board in the overall context of understanding by the Board of the Company's principle and values, philosophy and mission statement, strategic and business plans and demonstrating this through its action on important matters, the effectiveness of the Board and the respective Committees in providing guidance to the Management of the Company and keeping them informed, open communication, the constructive participation of members and prompt decision making, level of attendance in the Board meetings, constructive participation in the discussion on the Agenda items, monitoring cash flow, profitability, income & expenses, productivity & other financial indicators, so as to ensure that the Company achieves its planned results, effective discharge of the functions and roles of the Board, etc.

The performance of the Committees is evaluated by the members of the respective Committees on the basis of the Committee effectively performing the responsibility as outlined in its Charter, Committee meetings held at appropriate frequency, length of the meetings being appropriate, open communication & constructive participation of members and prompt decision-making, etc.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

The criteria for Directors' appointment and for determining qualification, positive attributes and independence of a Director as mentioned in the ‘Policy for Appointment of Directors and Senior Management and Evaluation of Directors' Performance' in terms of Section 178(3) of the Act is mentioned below:

The Nomination and Remuneration Committee shall identify and ascertain the integrity, qualifications, expertise and experience of the person for appointment as Director, Key Managerial Personnel ("KMP") or at Senior Management level and recommend the same to the Board for appointment, if found suitable; A person should possess adequate qualifications, expertise and experience for the position he/ she is considered for appointment. The Committee has discretion to decide whether qualifications, expertise and experience possessed by a person are sufficient/ satisfactory for the concerned position; and The Company shall not appoint or continue the employment of any person as Managing Director/ Whole-Time Director who has attained the age of seventy years, provided that the term of the person holding this position may be extended beyond the age of seventy years with the approval of shareholders by passing a special resolution based on the statement pursuant to the provisions of Section 102 of the Act annexed to the notice or such motion indicating the justification for extension of appointment beyond seventy years.

Meeting of Independent Directors:

There should be atleast one meeting of Independent Directors in a year, without the attendance of non-independent Directors and members of the Management. One (1) meeting of the Independent Directors of the Company was held on February 04, 2022.

The Independent Directors in the meeting:

Review the performance of non-independent Directors including MD & CEO and the Board as a whole;

Review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors; and

Assess the quality, quantity and timeliness of the flow of information between the Company's Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

REMUNERATION POLICY:

The Board, on the recommendation of the Nomination and Remuneration Committee framed a Remuneration Policy for Non-Executive Directors (including Independent Directors) and a Remuneration Policy for Key Managerial Personnel and other Employees of the Company. The details of Remuneration Policy for Non-Executive Directors and Independent Directors are provided as Annexure IIIA and details of Remuneration Policy for Key Managerial Personnel and Other employees of the Company are provided as Annexure IIIB to this Report.

COMMITTEES OF THE BOARD:

A detailed note on the Board and its Committees is provided in the ‘Report on Corporate Governance' forming part of this Annual Report. The composition of the major Committee/(s) is as follows:

Audit Committee:

As on March 31, 2022, the Audit Committee comprised of three (3) Independent Directors viz. Ms Grace Koshie (Chairperson), Mr Pradip Roy (ceased to be a member w.e.f. July 30, 2021) Mr Anjani K. Agrawal (appointed as a member w.e.f. July 30, 2021), Mr Sunil Mitra and one (1) Non-Independent Director, Mr Subrata Talukdar.

Nomination and Remuneration Committee:

As on March 31, 2022, the Nomination and Remuneration Committee comprised of two (2) Independent Directors viz. Mr Pradip Roy (ceased to be Chairman and member w.e.f. July 30, 2021), Mr Anjani K. Agrawal (appointed as a Chairman and member w.e.f. July 30, 2021), Mr Pratip Chaudhuri and one (1) Non-Independent Director, Mr Subrata Talukdar.

Corporate Social Responsibility Committee:

As on March 31, 2022, Corporate Social Responsibility Committee comprised of four (4) members viz Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO, Mr Subrata Talukdar and one (1) Independent Director, Mr Pradip Roy (ceased to member w.e.f. July 30, 2021) and Mr Anjani K. Agrawal (appointed as a member w.e.f July 30, 2021).

Stakeholders Relationship Committee:

As on March 31, 2022, Stakeholders Relationship Committee comprised of three (3) members viz. Mr Subrata Talukdar (Chairman), Mr Vipul Khanna, MD & CEO, and one (1) Independent Director, Mr Pradip Roy (ceased to be a member w.e.f. July 30, 2021) and Mr Anjani K. Agrawal (appointed as a member w.e.f. July 30, 2021).

Investment Committee:

As on March 31, 2022, Investment Committee comprised of three (3) members viz. Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO and one (1) Non-Independent Director, Mr Subrata Talukdar.

Strategy Committee:

As on March 31, 2022, Strategy Committee comprised of three (3) members viz. Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO and one (1) Non-Independent Director, Mr Subrata Talukdar.

Risk Management Committee:

As on March 31, 2022, Risk Management Committee comprised of five (5) members viz. Mr Shashwat Goenka (Chairman), Mr Vipul Khanna, MD & CEO, one (1) Independent Director, Ms Grace Koshie, Mr Dinesh Jain and Mr Arun Tyagi, Officials of the Company.

RELATED PARTY TRANSACTIONS:

All the contracts/ arrangements/ transactions that were entered into by the Company during the financial year with related parties were on an arm's length basis and in the ordinary course of business and none of such related party transactions required the approval of the Board of Directors or the Shareholders as per the Act or SEBI LODR. Further, there were no materially significant related party transactions that may have potential conflict of interests of the Company at large. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm's length. All Related Party Transactions are placed before the Audit Committee for approval.

The policy on Related Party Transactions as approved by the Board is available on the website of the Company at the link: https://www.firstsource.com/wp-content/uploads/2022/03/FSL-Related-Party-Transaction-Policy.pdf.

The details of the related party transactions as required under the Act and the Rules are attached in Form AOC-2 as Annexure IV.

EMPLOYEES STOCK OPTION SCHEME:

The Company grants share-based benefits to eligible employees with a view to attracting and retaining the best talent, encouraging employees to align individual performances with the Company objectives, and promoting increased participation by them. With a view to provide an opportunity to the employees of the Company to share the growth of the Company and to create long term wealth, the Company has an Employee Stock Option Scheme (ESOS), viz., the Firstsource Solutions Employee Stock Option Scheme, 2003 (ESOS 2003). The Scheme is applicable to all eligible employees and Directors of the Company and its Subsidiary Companies. The Scheme is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, (SEBI (SBEB) Regulations), as amended.

Earlier, Firstsource Solutions Limited Employee Stock Option Scheme 2003 (hereinafter referred to as the "ESOS 2003") provided for its implementation through primary issuance of the Company's shares to the employees of the Company. However, with a view to ensure better efficacy and administration of the Scheme, it was proposed that the Scheme can be dealt with and implemented through trust route. Accordingly, during the year, your Company implemented the ESOS 2003 through trust route i.e., Firstsource Employee Benefit Trust, to align the interests of its employees with the long-term interests of the Company by motivating the employees with incentives and reward opportunities under the Scheme and create a sense of ownership and participation amongst the employees in the sustained growth of the Company. The ESOS 2003 is applicable to all eligible employees and Directors of the Company and its Subsidiary Companies. The ESOS 2003 is in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, (SEBI (SBEB) Regulations), as amended.

FIRSTSOURCE SOLUTIONS LIMITED EMPLOYEE STOCK OPTION PLAN 2019 ("ESOP 2019 PLAN"):

The Company has established the ESOP 2019 Plan, pursuant to approval of shareholders at the Annual General Meeting on August 02, 2019, to allow our employees to acquire greater proprietary stake in our success and growth, and to encourage our employees to continue their association with us. The ESOP 2019 Plan is in compliance with SEBI (SBEB) Regulations, as amended.

As per the ESOP 2019 Plan, the Nomination and Remuneration Committee will issue stock options to the identified eligible employees/ Director(s) of the Company and its Subsidiaries at an exercise price which will be the face value of the Shares or any higher price which may be decided by the Nomination and Remuneration Committee considering the prevailing market conditions and the norms as prescribed by SEBI and other relevant regulatory authorities. Further, the stock options under the said plan would vest & be exercisable in tranches as determined by the Nomination and Remuneration Committee basis the power given to the Nomination and Remuneration Committee in line with the ESOP 2019 Plan.

LONG TERM INCENTIVE STRUCTURE GRANTS UNDER ESOP 2019 PLAN:

In continuation of the Company's philosophy of aligning employee interests with shareholder value creation and in line with global practices, the Nomination and Remuneration Committee of the Board of Directors has approved the Long Term Incentive Structure ("LTI") in the form of ESOP grants which will be granted to identified eligible employees as per ESOP 2019 Plan. This unique plan is a combination of tenure and performance based ESOPs aligned to shareholder value creation which will deepen employee ownership in the Company.

A) Tenure based Structure (ESOP Structure):

Options in this structure will be granted to identified eligible employees, basis the below criteria:

1. Drives ownership of employees in Company's fortunes for better engagement and retention;

2. Seen as part of the total compensation package, in line with competition/ market practice;

3. Quantum of grants is based on the performance and potential of the individual employee.

Vesting Schedule in the given structure is:

B) Performance based Structure (PSU Structure):

Option in this structure is granted to identified eligible employees – Functional and Business heads, basis the below criteria:

1. Attainment of options can range between 0% and 150% of tranche eligible for vesting for the respective performance measurement period. Each tranche is separate. Performance and vesting in one performance period has no bearing on performance and vesting in another performance period;

2. Subject to terms and conditions of the scheme, the performance-based component of the grant is measured basis the Performance targets as agreed annually by the Management.

Vesting Schedule in the given structure is:

Under both the above structures, grants will be issued at face value of the shares or any higher price which may be decided by the Nomination and Remuneration Committee and will have an exercise period up to three (3) years as per the ESOP 2019 Plan and as determined by the Nomination and Remuneration Committee.

Under the ESOP 2019 Plan, as on March 31, 2022, the Nomination and Remuneration Committee has approved grant of 4,522,250 options which are a mix of tenure based and performance-based structure options to its senior leadership team and employees.

FIRSTSOURCE EMPLOYEE BENEFIT TRUST UNDER ESOP 2019 PLAN:

The ESOP 2019 Plan shall be implemented through the Trust which will be administered under the guidance, advice and direction of the Nomination and Remuneration Committee in accordance with the provisions of the Companies Act, 2013 and SEBI (SBEB) Regulations.

The Board of Directors has facilitated setting up of Employee welfare trust, viz "Firstsource Employee Benefit Trust" ("ESOP Trust") to implement the ESOP 2019 Plan which has been formed by the Company. The Company shall provide financial assistance to the ESOP Trust for secondary acquisition of equity shares of the Company for the purpose of implementation of ESOP 2019 Plan. The terms and conditions for the financial assistance provided shall be in compliance with the Companies Act, 2013 read with Companies (Share Capital and Debenture) Rules, 2014 and SEBI (SBEB) Regulations.

As on March 31, 2022, the ESOP Trust holds 17,011,351* equity shares purchased through secondary market.

* Includes 61,875 equity shares credited to ESOP holders post March 31, 2022.

SUBSIDIARY COMPANIES:

As on March 31, 2022, your Company has 20 subsidiaries and 1 Associate Company:

Domestic Subsidiary: (1)

1. Firstsource Process Management Services Limited [Wholly Owned Subsidiary ("WOS") of the Company];

International Subsidiaries: (19)

2. Firstsource Solutions UK Limited, UK (WOS of the Company);

3. Firstsource Solutions S.A., Argentina (Subsidiary of Firstsource Solutions UK Limited);

4. Firstsource BPO Ireland Limited (WOS of Firstsource Solutions UK Limited);

5. Firstsource Group USA, Inc., USA (WOS of the Company);

6. Firstsource Business Process Services, LLC, USA (WOS of Firstsource Group USA, Inc);

7. Firstsource Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC);

8. One Advantage, LLC, USA (WOS of Firstsource Business Process Services, LLC);

9. MedAssist Holding, LLC, USA (WOS of Firstsource Group USA, Inc); 10. Firstsource Solutions USA, LLC, USA (WOS of MedAssist Holding, LLC);

11. Firstsource Health Plans and Healthcare Services, LLC, USA (Formerly known as Firstsource Transaction Services, LLC) (WOS of Firstsource Solutions USA, LLC);

12. Sourcepoint, Inc. (WOS of Firstsource Group USA, Inc);

13. Sourcepoint Fulfillment Services, Inc. (WOS of Sourcepoint, Inc.);

14. Firstsource Dialog Solutions (Private) Limited (Subsidiary of the Company);

15. PatientMatters LLC (WOS of Firstsource Solutions USA, LLC);

16. Kramer Technologies, LLC (WOS of PatientMatters LLC);

17. Medical Advocacy Services For Healthcare, Inc. (WOS of PatientMatters LLC);

18. The StoneHill Group, Inc (WOS of Sourcepoint, Inc.);

19. American Recovery Services, Inc. (WOS of Firstsource Business Process Services, LLC, USA);

20. Firstsource Solutions Mexico, S. de R.L. de C.V (WOS of Firstsource Group USA, Inc.).

Associate Company: (1)

1. Nanobi Data and Analytics Private Limited

Note:

1. Sourcepoint, Inc., a step down subsidiary of the Company, had executed a stock purchase agreement dated November 09, 2021 to acquire 100% stake in The StoneHill Group,

Inc. a leading US mortgage services provider focused on quality control and due diligence. On account of this, The StoneHill Group, Inc. became a step down subsidiary of the Company.

2. Firstsource Business Process Services, LLC, a step-down subsidiary of the Company, had executed a stock purchase agreement dated December 29, 2021 to acquire 100% stake in American Recovery Service Incorporated ("ARSI"), a leading US legal collection service provider. On account of this, ARSI became a step down subsidiary of the Company.

3. Firstsource Solutions M?xico, S. de R.L. de C.V. ("Firstsource Solutions M?xico") was incorporated as a subsidiary of Firstsource Group USA Inc., Subsidiary of the Company, on December 13, 2021. On account of this, Firstsource Solutions M?xico became a step down subsidiary of the Company.

The Company has no other joint venture Company. No company has ceased to be a joint venture or associate during the FY 2021-22.

Report on the Performance and Financial Position of Subsidiaries:

A report on the performance and financial position of each of the subsidiaries as per the Act, in the prescribed format AOC – 1 is annexed to the consolidated financial statement and hence not repeated here for the sake of brevity. The Company has a policy on material subsidiaries pursuant to Regulation 16(1)(c) of the Listing Regulations. The same is available on the website of the Company viz: https://www.firstsource.com/wp-content/ uploads/2021/12/Material-Subsidiary-Policy.pdf.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT:

Business Responsibility Report for the year as stipulated under Regulation 34(3) of the Listing Regulations is separately given and forms part of this Annual Report.

REPORT ON CORPORATE GOVERNANCE:

The adherence to the corporate governance practices by the Company not only justifies the legal obedience of the laws but dwells deeper conforming to the ethical leadership and stability. It is the sense of good governance that our leaders portray, which trickles down to the wider Management and is further maintained across the entire functioning of the Company.

The Company is committed to maintain the highest standards of corporate governance and adheres to the corporate governance requirements set out by SEBI.

The report on Corporate Governance as stipulated under provisions of Chapter IV & Schedule V of the Listing Regulations is separately given and forms part of this Annual Report. The requisite certificate from a Practicing Company Secretary confirming compliance of the conditions of corporate governance is attached to the Report on Corporate Governance.

Pursuant to amendment of Rule 12 of Companies (Management and Administration) Rules, 2014 by MCA, wherein, instead of attaching an extract of annual return (to be prepared in Form MGT – 9) to the Directors' Report, the Company can host a copy of annual return on the website of the Company and a web link of the same to be given in the Directors' Report.

Accordingly, a copy of Annual Return is available on the website of the Company at the below link: https://www.firstsource.com/ wp-content/uploads/2022/07/Annual-Return-FY-2021-22-1.pdf

A) Conservation of Energy:

The Company continues to make progress towards energy conservation across all its operation centres by adopting efficient Air-conditioning management system, usage of Energy efficient LED and efficient power back-up system. The Company is continuously monitoring earlier initiatives of reducing energy consumption within data centre/(s) and across its' operation centres. The Company, similar to its previous year's initiatives of GREEN IT, continued to replace the normal Desktops and old Thin clients with Mini Desktops/ Zero thin-clients in US Geography as the power consumption of mini desktop & Zero thin-clients was 2.5 times less than the power consumed by normal desktops and nearly 5 times less during standby mode. Scripts have been deployed where possible to shut down the Desktops/ Thin clients which are not being used for more than 1 hour which helps conserve energy.

Cloud-First Initiatives: As part of Company's Cloud-First and Digital-First-Digital-Now (DFDN) journey, the Company has moved significant part of its Operations and Deliveries, across the geographies and business units, to cloud. Over the past few years, the Company has adopted multiple state-of-the-art technologies by partnering with Global Cloud Services Platforms (e.g. Amazon Web Services, Microsoft Azure, Google cloud etc.) to move its applications and digital workload to a Multi-Cloud environment. Most of Company's client facing application are deployed on Multi-Cloud environment to make them more Scalable, Resilient and Fault-tolerant;

Digital Enabled Contact Center (DECC): As part of our DECC implementation, the Company has implemented multiple Next Generation Contact Centres (NGCC) across the global and business units. The DECC and Omni Channel Platform is further enhanced with Digital Capabilities, such as AI, Social Integration, Chat-Bot, Analytics etc. These state-of-art technologies are implemented to enhance and automate call handling capabilities by Digital/ AI interference, thus enhancing the Customer Experience (CX);

NextGen Cybersecurity: The Company has also invested significantly in a cloud based Next Generation Cyber-Security solution, covering the entire horizon of endpoints, servers and network security, integrated with Cisco Threat Response and Threat Intelligence. The security solution provides complete protection to endpoints, servers in Data Centre and also Company's cloud platform. The Company is also evaluating a Cloud based Zero Trust Security and Network solution that will further improve the security posture and resiliency.

C) Foreign Exchange Earnings and Outgo Activities relating to exports, initiatives taken to increase exports, development of new export markets for services and export plans:

The Company's income is diversified across a range of geographies and industries. During the year, 85.54% of the Company's standalone total revenues were derived from exports. The Company provides BPO services mostly to clients in North America, UK and Asia Pacific region. The Company has established direct marketing network around the world to boost its exports.

FOREIGN EXCHANGE EARNED AND USED:

The Company's Foreign Exchange Earnings and Outgo during the year were as under:

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company obtained Secretarial Audit Report from MMJB & Associates LLP (CP No. 8968), Company Secretaries for the FY 2021-22. The Secretarial Audit Report is annexed to this Report as Annexure V.

ANNUAL SECRETARIAL COMPLIANCE REPORT:

SEBI vide its Circular No. CIR/CFD/CMD1/27/2019 dated February 08, 2019 read with Regulation 24(A) of the Listing Regulations, directed listed entities to conduct Annual Secretarial Compliance Audit from a Practicing Company Secretary of all applicable SEBI Regulations and circulars/ guidelines issued thereunder. The said Secretarial Compliance report is in addition to the Secretarial Audit Report by Practicing Company Secretaries under Form MR – 3 and is required to be submitted to Stock Exchanges within 60 days of the end of the financial year. The Company has engaged the services of MMJB & Associates LLP (CP No. 8968), Company Secretaries for providing this certification.

STATUTORY AUDITORS AND AUDITORS' REPORT:

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, bearing Registration Number: 117366W/W-100018, who were appointed as the Statutory Auditors of the Company by the members at their 16th Annual General Meeting (AGM) for a term of consecutive five (5) years will complete their present term on conclusion of the ensuing 21st AGM of the Company.

The Board, on the recommendation of the Audit Committee, recommended for the approval of the Members, the re-appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, bearing Registration Number: 117366W/W-100018, as the Statutory Auditors of the Company for a second term of five (5) years from the conclusion of the ensuing 21st AGM till the conclusion of the 26th AGM of the Company to be held in the year 2027.

The proposed Auditors have confirmed their willingness and eligibility in terms of provisions of Section 141 and other relevant provisions of the Act.

The Notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

During the year under review, there were no material or serious instances of fraud falling within the purview of Section 143 (12) of the Companies Act, 2013 and rules made thereunder, by officers or employees reported by the Statutory Auditors of the Company during the course of the audit conducted and therefore no details are required to be disclosed under Section 134 (3)(ca) of the Act.

GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these matters during the FY 2021-22:

Issue of equity shares with differential rights as to dividend, voting or otherwise;

Issue of shares to employees of the Company under any scheme save and except Employees Stock Option Schemes as referred to in this Report;

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company's operations in future.

Further, your Directors would like to mention that the MD & CEO received 158.78 million as remuneration during the year from

Firstsource Group USA Inc. subsidiary of the Company.

The disclosure pursuant to Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 read with Circular No. CIB/ CFD/Policy/CELL/2, 2015 dated June 16, 2015, will be placed on the website of the Company.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(3) (c) and 134(5) of the Companies Act, 2013, Directors of your Company state and confirm that:

1. In the preparation of the annual accounts for the FY 2021-22, the applicable Ind-AS accounting standards have been followed and there are no material departures from the same;

2. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profit of the Company for year ended on that date;

3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safe-guarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The Directors had prepared the annual accounts on a going concern basis;

5. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

APPLICATION/PROCEEDING PENDING UNDER IBC:

None of the application has been made or any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year.

ACKNOWLEDGEMENTS:

The Board wishes to place on record its sincere appreciation for the support and co-operation extended by all the customers, vendors, bankers and business associates. The Board also expresses its gratitude to the Department of Telecommunications, Collector of Customs and Excise, Director of Special Economic Zone, Ministry of Labour, Ministry of Corporate Affairs, Software Technology Parks of India, and various Governmental departments and organisations for their help and cooperation.

Further, the Board places on record its appreciation to all the employees for their dedicated service. The Board appreciates and values the contributions made by every member across the world and is confident that with their continued support, the Company will achieve its objectives and emerge stronger in the coming years.

COVID-19 extracted a huge toll on lives and livelihoods of million of people in India and other parts of the world. COVID-19 pandemic continues to pose considerable risks across the globe. The Company had implemented its business continuity strategies, including work from home, and has put in place processes and guidelines to ensure safety of workplace for functioning offices. The Company is also in continuous engagement with its clients to ascertain the COVID-19 situation and is accordingly devising strategy to mitigate the impact.

As a result of continuous monitoring of the situation and formulation of its business strategies on an ongoing basis during difficult times the Company's financial result for the year 2021-22 has been encouraging.

Your directors specially thank the employees in the front line and support staffs who had acted selflessly to keep the business continuity during the challenging times of COVID-19 and have supported to serve our clients and other stakeholders in the challenging times.