UGRO Capital Limited has submitted this clarification to BSE Limited and National Stock Exchange of India Limited pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, in response to a media article published in the Economic Times on 28 May 2026.

The disclosure addresses concerns regarding proposed remuneration for Mr. Shachindra Nath, the company's Managing Director who is classified as Promoter by operation of law. The company makes two central points in response to the media report:

  • The proposed compensation for Mr. Nath is at or below market median, as independently confirmed by Aon, a global compensation advisory firm commissioned by the company's 100% independent Nomination and Remuneration Committee in April 2026.
  • Proxy advisory firms have routinely issued 'AGAINST' recommendations for Managing Director appointments at comparable NBFCs including Five-Star Business Finance, SBFC Finance, and MAS Financial Services, with shareholders ultimately approving the appointments in each case.

Key Context and Background

Mr. Shachindra Nath founded UGRO Capital in 2018 by acquiring a listed company and building it into India's first listed MSME-focused DataTech lending NBFC. He has enabled over Rs. 2,500 crores of equity capital raises over eight years, diluting his own shareholding to below 3%. His Promoter classification permanently excludes him from ESOPs, SARs, and all equity-linked long-term incentives that comparable professional MDs receive.

Independent Benchmarking Details

The Nomination and Remuneration Committee commissioned an independent benchmarking exercise from Aon in April 2026. Aon compared Mr. Nath's proposed compensation against three peer groups: promoter MDs, founder MDs, and MDs of NBFCs with AUM above Rs. 15,000 crores. Across all groups, the proposed compensation was found to be below or at market median.

The proposed compensation structure consists of:

  • Total Fixed Cost: Rs. 7 crores (unchanged from current year)
  • Deferred Fixed Compensation: Rs. 3 crores (replaces prior variable components)
  • Total proposed compensation: Rs. 10 crores

Proxy Advisory Precedents

The disclosure cites specific examples of peer companies where proxy advisors issued AGAINST recommendations but shareholders approved the appointments:

  • Mr. D. Lakshmipathy, Chairman and MD of Five-Star Business Finance: Received AGAINST recommendations from both IiAS and SES, but shareholders approved his re-appointment and remuneration at September 2024 AGM
  • Mr. Aseem Dhru, MD and CEO of SBFC Finance: Received AGAINST recommendation from IiAS on remuneration of Rs. 16.76 crores (more than double Mr. Nath's proposed compensation), approved by shareholders
  • Mr. Kamlesh Gandhi, Founder Chairman and MD of MAS Financial Services: Received AGAINST recommendation from IiAS on remuneration of Rs. 7.61 crores (nearly identical to Mr. Nath's current compensation of Rs. 7.59 crores), approved by shareholders

Variable Pay Framework

The variable pay resolution is an enabling authority that would allow the Nomination and Remuneration Committee to design a complete framework including performance metrics, measurement period, absolute cap, malus/clawback, and deferral provisions. Share price appreciation is proposed as one criterion among others, designed to align the founder's interests with shareholders since he is excluded from equity-linked compensation.

The governance structure requires that any variable pay would be approved by the Board of Directors, which includes representatives of UGRO's largest shareholders (approximately 25% equity ownership), requiring 2/3rd majority approval.

Legal Opinion on Variable Pay

Mr. Sumit Agrawal, Senior Partner at Regstreet Law Advisors and former SEBI officer, has stated publicly in the same ET article: 'Merely using share price as a reference metric for determining variable pay does not, by itself, bring the arrangement within the ambit of the SEBI SBEB regulation.' This position is recorded in the contemporaneous minutes of the Company's Nomination and Remuneration Committee.

Change of Control Severance Provision

Mr. Nath has extended personal guarantees of approximately Rs. 1,830 crores in favor of the company's institutional lenders without any commission or fee. These obligations are contractual commitments that continue regardless of employment status.

The change of control severance provision (identical to the provision approved by shareholders by special resolution on 11 May 2023) addresses protection for these continuing liabilities in the event Mr. Nath is no longer employed due to an external change of control event. The provision is contingent and event-triggered, payable only if a Change of Control occurs.

Chairman's Statement

Satyananda Mishra, IAS (Retd.), Independent Chairman of the Board, provided assurance that should the variable pay resolution be approved, any compensation determined will be benchmarked independently against comparable companies with the objective of aligning the Founder's interests with shareholders. He emphasized that Mr. Nath's personal guarantee of Rs. 1,830 crores of company borrowings without commission represents rare personal commitment deserving recognition.

The document is signed by Satish Kumar, Company Secretary and Compliance Officer, and digitally dated 28 May 2026 at 15:03:10.