Carborundum Universal Ltd

Your Directors have the pleasure in presenting the 70^th Annual Report together with the Audited Financial Statements for the year ended 31^st March 2024. The Management Discussion & Analysis Report which is required to be furnished as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the Listing Regulations) has been included in this Report to avoid duplication and overlap.

Economic Overview

Geopolitical implications of the Russia-Ukraine crisis, conflict in Middle East and Red Sea disruptions continued to prevail during the year and impact global supply chain. This led to high uncertainty and volatility across economies globally. The prices of commodities, food, energy and fertilisers which rose sharply during FY23, softened a bit after central banks responded with monetary policy tightening to contain inflation. During FY24, global growth proved resilient, with inflation declining faster than anticipated. Economic growth was divergent across countries, with strong growth in the United States (US) and emerging markets which was offset by a slowdown in most European countries, mainly Germany. Recent economic indicators point to some moderation of growth and global trade remaining subdued. Further, the Red Sea crisis has increased shipping costs sharply and lengthened delivery times, disrupting production schedules and rising price pressures.

Global Gross Domestic Product (GDP) growth is projected to ease from 3.1% in 2023 to 2.9% in 2024, before recovering to 3.0% in 2025. Annual GDP growth (2.5% in 2023) in the US is supported by household spending and strong labour market conditions but is expected to moderate to 2.1% in 2024 and 1.7% in 2025. Euro area GDP growth is projected to be 0.6% in 2024 and 1.3% in 2025, with activity held back by tighter monetary policy in the near term and adverse effects of the energy price shock. Growth in China is expected to ease from 5.2% in 2023 to 4.7% in 2024 and 4.2% in 2025, despite additional policy stimulus, reflecting subdued consumer demand, high debt, and a weak property market. The emerging-market economies continued to grow at a solid pace, despite tighter financial conditions, reflecting the benefits of improved macroeconomic policy frameworks, and strong investment in infrastructure in many countries. India and Indonesia are both expected to expand steadily over the next two years, helped by strong investment growth, with GDP rising by more than 6% % and 5% per annum respectively (source - OECD, Economic Outlook, Feb 2024).

Global inflation, a key concern over the past two years, is showing signs of easing. Global headline inflation fell from 8.1% in 2022 to an estimated 5.7% in 2023 and is projected to decline to 3.9% in 2024. However, food price inflation remains a critical issue, exacerbating food insecurity and poverty, particularly in developing countries.

The Indian economy registered sustained growth on the back of increasing domestic demand, government impetus to infrastructure spending and export growth, also enhanced by the continuing 'China Plus One' sourcing strategy of global players. The Indian economy witnessed a great year, closing 2023 with a GDP of US$ 3.73 trillion, and a projected GDP growth rate of 6.3 % against the global average of 2.9 %. As India is geared to become a US$ 5 trillion economy by 2027, the calendar year 2023 saw decent manufacturing sector growth, supported by strong growth in the steel, cement, and automobile manufacturing sectors. The infrastructure and real estate sectors have performed well while the construction sector recorded decent growth. The manufacturing sector has an estimated potential to grow into a US$ 1 trillion industry by 2025-26, driven by the government's 'Make in India' initiative, which is further aided by multiple industry-promoting schemes such as the Production-Linked Incentive (PLI) scheme.

Revenues

During the year, the standalone revenues grew by 4.9% and the consolidated revenues by 0.6%. One of the key reasons for flat growth at consolidated level is the weakening Rouble against INR at VAW, our Russian subsidiary representing 19.4% of consolidated CUMI. VAW's revenue in Rouble FY23 was converted into INR at 1.23 in FY23 against 0.92 in FY24. At constant exchange rate of FY23, overall growth of CUMI would have been 7.0% instead of 0.6%.

The Company began its financial year with a solid start in all three business segments. On one side there were positive signs of improvement across economies with inflation coming down, re-opening of China, easing of supply chain disruptions, and stronger than expected aggregate demand, while on the other side some economies were struggling with aggressive interest rate hikes, geo-political tensions, and recessionary trends. Despite these challenges, the Company's performance yet again speaks about strong demand for its quality products/ solutions, manufacturing and research capabilities, and timely execution in domestic and overseas markets.

For the Abrasives segment, consolidated revenues grew by 2.7% at ^20910 million compared to last year. Standalone Abrasives was at ^11503 million and grew by 3.9% compared to last year. Industrial and precision segments had good growth. Retail segment was below last year and was impacted due to low priced imports from China and competition from new entrants. Sales for Russian subsidiary, Volzhsky Abrasive Works grew significantly in local currency but resulted in de-growth when converted into INR. CUMI America performed well, while the domestic subsidiary, Sterling Abrasives had marginal growth. The German subsidiaries Rhodius and Awuko were able to deliver a single digit growth when converted to INR compared

to last year despite softening in demand in parts of Europe and aggressive price competition in the market.

Electrominerals, on a consolidated basis for FY24, had sales of ^15447 million compared to ^16338 million during last year. Standalone Electrominerals was at ^7411 million, and it grew by 5.6% compared to last year. Volume growth in Aluminas and Silicon Carbide has been good, but price realisations were impacted due to low-priced imports. Sales of the Russian subsidiary, Volzhsky Abrasive Works grew significantly in local currency on account of product mix, exchange rate, and increase in price and volume. However, when converted to INR, it shows a lower performance because of weaker Rouble in FY24 against FY23. Foskor Zirconia, South Africa had lower sales volumes compared to last year. This is majorly on account of postponement of offtake by their major customers and price pressure from Chinese suppliers.

Consolidated Ceramics for FY24 grew by 4.8% to ^10767 million, whereas standalone Ceramics grew by 5.6% to ^8813 million compared to ^8342 million during last year. Refractory, Wear Ceramics and Metallised Cylinders' businesses combined grew in double digits but with de-growth in Engineered Ceramics business, overall standalone segment resulted in a 5.6% growth. Subsidiaries in Australia and America registered very good growth.

Standalone business, which grew by 4.9% to ^25932 million in FY24, was majorly driven by growth from Electrominerals segment at 5.6%, Ceramics segment at 5.6% and Abrasives segment at 3.9%.

The subsidiaries in other segments including PLUSS Advanced Technologies Limited (PLUSS) and Southern Energy Development Corporation Limited (SEDCO) grew in double digit compared to last year, while Net Access India Limited de-grew marginally.

The following table summarises the standalone and consolidated revenues - both segment and geography wise:

(^ Million)

The Company's consolidated revenues from India grew by 5% and from rest of the world de-grew by 3% due to Rouble depreciation.

Manufacturing

The manufacturing team played a vital role in focused production planning and order execution to create a faster growth momentum. The core product segments continued to run at full capacity. Continued focus on Total Productive Maintenance (TPM) helped the Company improve the quality of its products and operate plants efficiently while reducing the overall cost of operations. Capital expenditure across all geographies was directed at capacity expansion, facilities for new products, quality enhancement, line balancing, and general infrastructure.

Earnings & Profitability

The Company's standalone financial results are summarised in the table below:

(^ Million)

Standalone profit before tax stood at ^4631 million as compared to ^4316 million during the previous year.

The Company uses a variety of raw materials for its products - Bonds, Cotton Yarn, Grains, Calcined Alumina, Tabular Alumina, Brown fused Alumina, White fused Alumina, Silicon Carbide, Mullite, Pet Coke, Bauxite, and Zircon Sand amongst others. The sourcing is a prudent mix of indigenous and imported materials. Aided by judicious sourcing and optimising throughout in production, material consumption continued to improve during the year marginally. Significant improvement in specific material and energy consumption was recorded across businesses. Also, 1.8 MWp of solar system was commissioned at Edappally location.

Power and fuel cost increased by 0.5%from ^2295 million in the preceding year to ^2307 million during the current year.

Employee benefits expense increased from ^2369 million in the preceding year to ^2584 million during the current year.

Except for the Electrominerals segment, the Profit before finance cost, exceptional items and tax expanded in all segments due to an increase in revenue, more favourable cost structures and better realisation in some segments. The Electrominerals segment was impacted due to the pricing pressures in the market.

Finance costs were at ^42 million compared to ^150 million in the previous year. Total Comprehensive Income increased from ^3236 million to ^3399 million.

The consolidated profit before tax and exceptional item (before share of Associate & Joint ventures) entity-wise is represented below:

(^ Million)

# Consolidated

On a consolidated basis, the profit before tax and exceptional item (before share of profit from Associate and Joint Ventures) increased to ^6064 million from ^5177 million. Profit after tax and non-controlling interests has increased to ^4613 million from ^4140 million. The performance of the subsidiaries is detailed separately in this Report.

Financial Position

An overview of the Company's financial position - on a standalone and consolidated basis is given below: (^ Million)

On a consolidated basis, the total equity attributable to owners as on 31^st March 2024 was ^31257 million. There was an increase (net of dividend) to the extent of ^3051 million. Non-controlling interest was at ^1393 million and Liabilities (other than loans) was at ^7742 million.

The loans outstanding decreased to ^1127 million from ^2301 million. Net fixed assets (including goodwill and Right of use assets) increased to ^16391 million during the current year from ^16142 million in the previous financial year.

Cash Flow

The Company's cash flow is healthy. The following table summarises the Company's standalone and consolidated cash flows for the current and previous year: (^ Million)

On a standalone basis, net cash generation from operations was ^4008 million in FY 2023-24 compared to previous year's ^3440 million. Net cash outflow on account of investing activities was ^770 million majorly towards capital expenditure. Net cash

outflow on account of financing activities was ^1611 million which is attributable primarily to repayment of borrowings. The net increase in cash and cash equivalents was ^1627 million against the net decrease of ^59 million in FY 2022-23.

Key Financial Ratios (on a standalone basis)

*excluding exceptional income/expenses (Net)

SHARE CAPITAL

The paid-up equity share capital as on 31^st March 2024 was ^190.26 million. The capital increased during the year by ^0.32 million, consequent to allotment of shares upon exercise of Stock Options by employees under the Company's Employee Stock Option Plan 2016.

DIVIDEND

Considering the past dividend payout ratio and the current year's operating profit, the Board has considered it appropriate to recommend a final dividend of ^2.50/- per equity share of ^1/- each. It may be recalled that in January 2024, an interim dividend at the rate of ^1.50/- per equity share of ^1/- each was declared and paid in February 2024. This aggregates to a total dividend of ^4.00/- per equity share of ^1/- each for the year. The Company's Dividend Policy is available at https:// www.cumi-murueappa.com/wp-content/uploads/2019/02/ dividend-distribution-policv.pdf. The dividend paid as well as being recommended for the year ended 31^st March 2024 is in line with this policy.

TRANSFER TO RESERVES

An amount of ^500 million has been transferred to the General Reserve of the Company as on 31^st March 2024.

PERFORMANCE OF BUSINESS SEGMENTS

The business profile, market developments, and current year performance are elaborated in the following sections:

Abrasives Business Profile

This SBU is in the business of engineering surfaces. It manufactures and distributes rigid and flexible abrasives and adjacent products that are used in the generation of precision, functional, or enduring surfaces. The key product segments are Bonded Abrasives, Coated Abrasives, Metal Working Fluid, Super Abrasives and allied products.

Rigid or Bonded Abrasives products grind, clean, scour, abrade or remove solid material through a rubbing action. Bonded Abrasives are made using Glass Bonds (vitrified), Rubber Bonds or Phenolic Resin Bonds. Coated Abrasives are hard synthetic minerals coated onto paper, fibre, cloth, or film and finally formed into different shapes, sizes and types according to application needs. Abrasive materials and abrasive products are utilised in several end user industries such as Automobiles, Auto Ancillary, Metalworking, Building and Construction, woodworking, Railways, Aerospace and General Engineering.

This business has over seven decades of experience in abrasives manufacturing, application engineering and distribution. Strong Research & Development backed by application engineering and supported by multi-generation channel partners are the strengths of this business. Over the years, the Company has a cutting edge in this business as it has built world class facilities with strong processes.

The competitive advantage of the business comes from its raw materials sourced from the Electrominerals business of the Company and from the best suppliers within India and across

the world. These inputs are then formulated, and the products are designed based on a deep understanding of the end-use applications and supplied through robust distribution and retail networks.

Cost competitiveness is the overarching strategy for the business while ensuring that the supply requirements and changing needs of the market are met in full.

The business has eleven manufacturing plants located across India, Russia, and Germany.

Earlier, the Company acquired the assets of AWUKO Abrasives Wandmacher Gmbh & Co. KG (AWUKO) in FY22. Awuko is a market leader in leather and wood applications, and it has sufficient capacity for Coated Abrasives. This helped CUMI to gain access to Coated Abrasives capacity in Europe with a global distribution base and an experienced process and application engineering team. During same year CUMI acquired Rhodius Abrasives and took control of the company effective from 1^st April 2022. Rhodius manufactures best quality cutting and grinding discs globally. They lead in product innovation and quality with unique professional segment product suite. They have a proprietary production process setting industry benchmark. They have a strong legacy of seven decades of successful business serving more than 100 countries.

The marketing entities in North America, Middle East, France, South America, South Korea, Netherlands, and distributors across the globe provide strong market reach in India and over 55 markets globally.

Industry Scenario

The Indian market has been continuously witnessing a shift from manual grinding methods to mechanised processes, ushering in opportunities for new products in the Coated Abrasives segment. The Bonded Abrasives segment constitutes a key consumable in the Construction and Transportation industries, which has demonstrated high growth in the past decade due to rapid urbanisation and an increase in disposable income.

After a muted Q2, industrial activity in India increased in Q3 and positive trends were seen in Automotive sales - Passenger Vehicles (PV) and Tractors, compared to FY 2022-23. Cement production and Steel consumption both realised growth in Q3, after remaining subdued in previous months - positive signs for construction, infrastructure, and SMEs. However, owing to substantial slowdown in global economies, export linked businesses such as hand tool manufacturing, handicrafts, steel tube manufacturing, tractor exports continue to languish leading to lower production and thus lower consumption of abrasives.

Entry of several Paint Manufacturers in the abrasives segment relying on cheap imported products from China impacted the Company as well as other India based manufacturers.

Sales Overview

The Abrasives business on a standalone basis recorded revenues of ^11503 million compared to ^11069 million in the

previous year and on a consolidated level recorded revenue of ^20910 million as compared to ^20353 million in FY23.

The growth in automotive industry contributed to the growth in Precision as well as Industrial Abrasives business. The Industrial Abrasives business grew faster than the market through customer share gain and entirely high-volume growth in some select product groups like Thin Wheels and Flaps & Mops. Very highly competitive intensity continued in the Retail business, and this led to volume stress in this vertical.

The business had better price realisation compared to last year. Better product mix and better operational efficiencies helped the business to have better margins. The cost optimisation projects which were initiated in FY23 related to design-to-value, packaging cost improvements, process efficiencies, and automation continued to deliver value in FY24.

The business continued to make steady progress in building distribution leadership, a key strategic pillar for the Company's growth. The appointment of new channel partners and expansion of dealer network across India helped the business. Substantial ground steps were taken to reign in counterfeit sales. Industrial business has focused on tracking derived demand, customer conversion, and sub-dealer motivation programs. With the continued efforts to re-invest and reinforce, brand rationalisation exercises have been undertaken.

New products continued to be developed and introduced in the market meeting the needs of customers. Process led innovation and stage gate methodology were implemented to enhance the success rate of new product launches. The business has invested substantially in upskilling the team to enable the team to navigate the changes and to deliver the results.

Manufacturing

The segment continued its focus on products made with high performance grains by working in co-ordination with the Electrominerals business. This helped to build a competitive advantage by developing and establishing a new range of products.

The focus on Coated Abrasives for FY24 was to improve the cost competitiveness to meet the relentless pressure in market pricing due to entry of non-abrasive players with cheaper imported products. While there was a drop in input prices, the availability and lead time took a hit due to various geo-political issues. Investments were made in an in-house cloth processing facility to improve quality and reduce lead time. Investments were also made in conversion and automation on the shop floor.

Bonded Abrasives continued with expansion of the QRM methodology (Quick Response to Manufacturing) for its Make- to-order line segments which helped in reducing factory lead time. A pilot level plant for manufacturing Super-Abrasives was also operational from the second half of the year and products are getting acceptance in the market. Investments were made in automated presses in the Thin Wheel line and in-house testing and quality control equipment to improve quality and consistency. The emphasis was also on enhancing safety at the workplace and enhancing Environment Social Governance (ESG) performance. Liquid fuel to Piped Natural Gas- (PNG) initiatives were also completed at Bonded facility in Hosur, Tamil Nadu.

The business successfully obtained from the Organisation for the Safety of Abrasives, Germany, the right to use "oSa" certification for specified Thin Wheel products produced in factories at Maraimalai Nagar and Uttarakhand after a stringent evaluation

process. Learnings from the same is also being adopted in other specific product lines.

The elements of Industry 4.0 have been imbibed in the day-to- day operations to leverage the gains of IOT and data analytics. A pilot project for implementing IOT was successful in one factory and the horizontal deployment of the same across other locations is being taken up.

Key Financial Summary Million)

Ceramics Business Profile

The Ceramics business comprises of the Industrial Ceramics and the Refractories product groups.

Industrial Ceramics

Industrial Ceramics business offers Advanced Ceramics & High- Performance Materials in over 30+ unique formulations for demanding and cutting-edge applications. The products deliver superior wear, electrical, corrosion, and ballistic performance across a wide range of applications in Mining & Mineral Processing, Power & Energy Systems, Mobility (Electric & ICE), Semiconductors & Electronics, and Defence & Aerospace. The business is built on a strong foundation of technology, advanced manufacturing, design, and application engineering.

The operations are carried out through manufacturing/service facilities located in India, Australia, and the USA. The subsidiaries in North America, Middle East and China also support this business in increasing market reach.

The Industrial Ceramics business based out of India is largely a global business and majority of the sales volumes are through exports. The Company is one of the major players in India, USA, Australia and Europe along with presence in specific product groups in Japan and China.

The Industrial Ceramics business has three product groups - Wear Protection Materials, Precision Engineered Ceramics, and Metallised Ceramics, for various industrial applications.

The business offers Wear Protection products & services to extend equipment life across a variety of industries such as Mining & Mineral Processing, Steel, Power, Cement and Bulk material handling. The business has expanded its product

offerings and developed new applications across key industry segments like port handling and non-ferrous industries. A solutions-based approach in solving customer problems through on-site wear audits, superior design & simulation, on- site installation services, enhances equipment performance, productivity, and life. A Prototype remote monitoring system of version-1 enabling the Company/its customers to forecast maintenance/ changeover of equipment has been tested. Version-2 with enhanced capability has been developed and is under testing and planned to be launched commercially in FY25.

The Company is a leader in the Australian market and has executed key projects in mining & port handling segments. The business expanded its customer base with robust growth in America, Europe, Middle East and Japan.

Precision Engineered Ceramics are used in emerging applications with a strong sustainability focus - such as Solid Oxide Fuel Cells, Hydrogen Electrolyzers, and Electrical Mobility. A strong focus on agile product development and continuous process innovation have helped the division roll out new products in collaboration with leading global customers in the USA, Japan, and India. Capabilities have also been developed for the manufacture of advanced components for the Semiconductor equipment industry.

The Company is a pioneer in India in the field of Metallised Ceramics and is today a strategic supplier for Global OEMs in the field of power distribution and also in Vacuum Electronics. With the objective of becoming a leader in Metallised Alumina Cylinders for Vacuum Interrupters, the business has been continuously enhancing capacities through new equipment and process innovations. The business has intensified its presence in the mobility segment. The mobility segment is growing strongly driven by the demand from the aftermarket

(in ICE technologies) and from the Electric Vehicle (EV) Industry. During the year, the business also made a strong foray into the high-speed bullet train project in India, with the supply of Advanced Ceramic Inserts.

The business has also been entering adjacencies and transformational spaces in Advanced Ceramics & Materials. The facility for Silicon Carbide and Non-Oxides is being further expanded to cater to the growing demands from industries such as Defence, Chemical processing / Fluid Handling, and others.

New forming capabilities - Hydraulic press for near-net forming, Isostatic Press for larger diameter and longer parts, enhanced capabilities in Ceramic 3D Printing - have been added during the year, to enable manufacturing of next generation of Ceramics for diverse applications.

Refractories

Super Refractories and Prodorite business addresses the thermal and corrosion protection across a wide range of Industries. Deep knowledge of materials, application engineering, and the ability to engineer shapes to meet critical operational conditions add superior value to our customers and stakeholders.

The business has three product groups - Super Refractories, Anti-corrosive and Composites.

Super Refractories are advanced materials that can withstand extremely high temperatures in the range of 18500C and harsh thermal/chemical environments making them the choice of materials for thermal protection of critical assets in applications such as metallurgy, glass, and chemical processing. Super Refractories are made from high purity raw materials such as alumina, zirconia, and silicon carbide.

Our strong knowledge of application engineering enables us to understand critical customer problems, this coupled with on-site thermal audits, and design techniques involving Finite Element Analysis (FEA), Computational Fluid Dynamics (CFD), and Thermal imaging solves critical thermal problems for our customers.

The Company is a leading player in specialised fired refractory, both dense and insulation bricks, intricate shaped items, Monolithics and pre-cast pre-fired Refractories. The key user industries for Refractory business are Iron & Steel, Glass, Carbon black, Cement, Ceramics, Petrochemicals, Thermal power plants, Non-ferrous metallurgy, Foundry, Heat treatment furnaces etc.

Anti-corrosives

Prodorite branded Anti-corrosive material is used in highly acidic or basic environments. The Company is a major player in this industry, serving a wide range of Chemical process industries and other industries dealing with the treatment of effluents. The Company's product range includes Acid resistant wall and floor tiles, Carbon bricks, Tiles, Anti-corrosive Lining, Epoxy and PU Flooring, Screeding, PU and Epoxy Coatings, and Waterproof construction chemicals. The Company's Polymer Concrete Cells

(Tanks) are also used in Copper and Zinc extraction units across the world.

The business uses a solution-based approach in helping our customer's critical assets from harsh corrosive environments, using a combination of application engineering, on-site corrosion audit and design & simulation knowledge to engineering shapes that offer an optimum fit and performance.

Composites

Composites are primarily Glass or Carbon Fibre reinforced polymer products manufactured through vacuum infusion, pultrusion, filament winding, grating, and hand lay-up methods. The product range includes large Chemical storage tanks, Chimneys, Flue Gas Desulphurisation (FGD) spray headers, Abrasion resistant Anti-corrosive pipes & Gratings, Windmill nacelle covers and nose cones, Automotive and Railway body panels, gratings, pallets, cable trays, flooring, chequered plates, roof sheets, chimney ladders, platforms, bridges, louvers, fencing etc.

Carbon Fibre Reinforced Composites (CFRP) are advanced materials manufactured by embedding Carbon Fibre into a Polymer matrix. These composites are valued in applications where strength-to-weight ratios are crucial, such as in Aerospace, and Defence segments. The dedicated dust free facility for manufacturing of structural parts is certified for EN 9100-2018 (Equivalent to AS 9100D of the Society of Automotive Engineers (SAE) and the JIS9100 -Japanese Aerospace Quality Group).

Industry Scenario Industrial Ceramics

The market for Wear Protection products - Mining, Mineral Processing, Cement, Steel, and others - remained buoyant during the year in India, Australia, USA and other key regions.

Solid Oxide Fuel Cells and Hydrogen market went through challenges due to a slower ramp of Hydrogen, and slowdown in some regions.

The Metallised Ceramics vertical supplies predominantly to the Power Distribution segment. The demand is expected to increase because of the push towards renewable energy and growing electrification (mobility, industry, buildings); transport (electric vehicles) and ageing infrastructure requiring modernisation.

Refractories

The demand for thermal protection of critical assets in core segments like Steel, Glass, Chemical processing, Carbon Black and Cement remained strong throughout the year.

The business executed large projects in Glass, Carbon black, Steel, and Heat treatment industries. Mega trends of urbanisation, infrastructure development and global rebalancing will drive the growth of refractory consumption.

However, the domestic market continues to experience considerable inorganic consolidation.

During the year, the business made significant progress in the global market in line with our strategic intent to go global. We

have expanded into key markets in Europe, USA, and the Middle East.

The business will continue to differentiate ourselves from the competitors through superior value addition through application engineering and design.

Anti-Corrosive and Composites

The business saw a resurgence in demand in Chemical industries, especially for fertiliser plants due to increased production of specialty crop nutrients. The demand resulted in significant growth in acid resistant liners and carbon products. During the year, the business was able to gain a significant market share in the Middle East and Africa.

The business continue to see opportunities for corrosion protection in non-ferrous metals like copper and zinc, where the Company's Polymer Concrete Cells (PCC) are used in both electro-chemical refining and electro-winning processes. Sustainability and policy-driven intervention will also lead to increased recycling of metals and recovery of non-ferrous and noble metals from E-Waste, resulting in increased usage of the electro-winning process.

The business also made significant gains in the supply of structural parts in Fibre Reinforced Polymer (FRP) for windmill nacelle covers. Power generation through wind will continue to grow with push towards cleaner sources of energy. Significant demand for offshore windmills is also expected.

Sales Overview

Revenues of the Ceramics business at consolidated level were at ^10767 million as compared to ^10274 million in FY23. At Standalone level, it increased by 6% from ^8342 million to ^8813 million on the back of good orders from Refractory, Wear Ceramics, and Metallised Cylinders.

Industrial Ceramics

The Wear Protection business grew strongly driven by the demand from Australia and USA - there was a strong focus on driving volume growth and continuous product innovation. The global power distribution market continues to grow steadily and the bussiness cemented its position in this market by ramping up volumes of Metallised Cylinders for this segment. While the Solid Oxide Fuel Cells and Electrolyzer market went through a slowdown, the division focused on derisking by ramping up volumes and capabilities in Mobility and Defence.

Refractories

The Demand for Refractories will continue to grow strongly in the domestic market in the core industries of Glass, Iron and Steel, Carbon black, Chemical processing, and Heat Treatment.

Sustainability will be a key driver in process changes in the user industries. The usage of alternate fuels like hydrogen in DRI plants, fast firing kilns in Ceramic industry, will reshape the usage of Refractories. An example of focusing on optimising ware to kiln furniture ratio in the ceramic industry for increasing the quality, efficiency and capacity of kilns will drive the demand for Low Thermal Mass Kiln Furniture systems, a key area where the business is developing strong capabilities.

Waste to energy and usage of alternate fuels like hydrogen will need high-purity Refractories to protect key process equipment. The business is developing products to address specific requirements of our key customers.

The business has grown significantly in export markets in key industries of Glass, Chemical processing and Heat treatment. With focused efforts in business development and agile customer engagement, business will continue to grow in exports and domestic markets.

Anti-Corrosive and Composites

Demand for Anti-Corrosive and Composite products will continue to grow strongly in the domestic market in Chemical industries. The business executed large orders in the Middle East and Africa during the year, besides entering new segments of conductive floor coating and industrial floor coatings with new products.

Business is continuing to invest in applications for Carbon Fiber Composites, especially for the drone industry demand for advanced composites will significantly increase due to the Indian Governments' policy of "Atma Nirbhar Bharat".

The demand of copper and non-ferrous metals, copper refining will drive the requirement for Polymer Concrete Cells and corrosion protection of Floor and structures. Increased usage of electro-refining and electro-winning will drive the requirement for Polymer Concrete Cells. The business has strong capabilities in design and development to cater to changing needs of the customers.

Industrial Ceramics & Refractories

The focus of the business was on volume growth in core segments and building capacities & capabilities for emerging segments.

The Wear Ceramics vertical sustained the focus on volume growth through debottlenecking and process innovations. The work on a new Tunnel Kiln for Engineered Ceramics vertical progressed well during the year - preparing the division to address the demand from emerging segments. The manufacturing lines for Metallised Cylinders were run at high utilisations during the year to meet the growing demand. The focus on quality improvements and reduction of rejections continued in a structured manner, helping the business improve its cost competitiveness.

During the year, the business-initiated state-of-the-art shuttle kiln for high alumina specialty refractories and an electric screw press for servicing orders of high strength refractories. These will be operational in FY25.

The business also strengthened Quick Response Manufacturing to improve lead time, and asset turnover and has seen benefits in both Refractories and Composites.

Key Financial Summary

Electrominerals Business Profile

The Minerals business of the Company spans India, Russia, and South Africa with eight manufacturing facilities including Maniyar (hydel power plant) and Okha (Bauxite mines) covering product groups - Fused Alumina [comprising Brown Fused Alumina (BFA) & its variants and White Fused Alumina (WFA)], Silicon Carbide (crude, macro and fine), Monoclinic Zirconia, Calcia Stabilised Zirconia and Alumina Zirconia. The Company also manufactures a range of 'specialties' like Surface and thermally treated grains, Solgel derived Alumina called Azure S, Speciality Alumina and Ceramic fine powders for niche markets. To enhance its operational competencies, the business has installed a 1.8 MW captive solar plant and operates a 12 MW Hydel power plant to insulate the operations from fluctuations in power tariffs.

The business continues its strategy by focusing on aggressive growth in the domestic and export market while catering to the requirements of internal customers. With a diversified product portfolio, the Electrominerals business provides customers with application specific products and solutions, aimed at attaining improved product performance, value and profitability. Business ensures this through speedy execution of projects, yield and efficiency improvement initiatives, enhanced asset utilisation and undertakes joint product development programs with customers. New initiatives of the business in the areas like Thermal spray powders, Zirconia variants and Monocrystalline Alumina, etc., would pave the next growth face for the mineral products. The business also spearheads its Research and Development through a Department of Scientific and Industrial Research (DSIR) approved research facility located at Kochi.

While the business focuses on regular operations with sweating of assets, value creation through process modification and improved asset utilisation, it progressively builds its capabilities and infrastructure for catering to the emerging transformational areas of opportunities like Graphene, High Purity Silicon Carbide, Battery materials and related areas through tie- ups for technology and by commissioning pilot scale plants. The Graphene facility started functioning and discussions are in progress with Technology Institutes for Joint Product Development, and commercial sales for selective applications. The trials for developing high purity SiC have given encouraging results and resulted in commercial sales.

In the year 2023-24 business set its target for various sustainability initiatives and commenced its sustainability journey to become more responsible to the society in terms of bringing better environmental controls, carbon footprint reduction and conservation of water. The business has engaged with the Confederation of Indian Industry (CII) for carbon footprint measurement and reduction in line with the Company's policy. The business in pursuit of its initiatives for carbon footprint reduction is also exploring opportunities for sourcing green energy by tying up with Solar/Hybrid Power producers under ISTS mechanism.

Volzhsky Abrasive Works (VAW), Russia, is the single largest silicon carbide producer at one location globally with capacity of 90,000 tonnes per annum. VAW also invests in process improvements regularly resulting in a clean environment.

Foskor-Zirconia in South Africa has portfolio of fused minerals into Zirconia for Ceramics and Refractories. This also provides feedstock to manufacture the high-performance Alumina- Zirconia Abrasive grains in the future.

Key user industries for this business are Abrasives, Refractories, Steel, Brake linings, Nuclear energy, Wooden Laminates, Friction composites, Diesel Particulate Filter, semi-conductor and others.

Industry Scenario

The business could see a stable demand for mineral products due to the good performance of the domestic Auto, Construction and Steel sector, whereas the price war with the manufacturers from China has dampened the spirit and opportunity for scaling up of products, markets, and applications. The continued focus of the Government on infrastructure spending and the continued growth of Steel industry has pushed the demand for Abrasives and Refractory products in the domestic market. The ongoing regional conflicts between countries and the red-sea challenges are imposing operational challenges on the business for scaling up of exports to Europe.

The expansion of Crushing & Grinding facility of SiC at Koratty, installation of a new continuous Ball Mill, Heat treatment and other infrastructures would equip the Mineral business to increase its product variants and cost positions. The Okha facility in Gujarat would continue to produce various grades of bauxite materials using local resources.

The business has been adding more value-added products to its portfolio since last few years. On similar lines, transformational products like Graphene is another opportunity where we have been tested & approved for selected applications in coatings, composites and energy and the business expects to scale up in the coming years. On High Purity Silicon Carbide, the production trial has been completed.

Sales Overview

The Electrominerals business on consolidated basis recorded a revenue of ^15447 million as compared to ^16338 million in FY23. At standalone level, business recorded revenue of ^7411 million compared to ^7020 million in the previous year.

The growth in the business can primarily be attributed to the good performance of domestic Abrasives and Refractory customers, who are the major consumers of Electrominerals. This could be evident from the stable performance reported by the user industries like Construction, Automobile, and Steel segments during the year. While sales to internal customers registered a moderate growth, export business registered a de-growth due to the prevailing geo-political situations and dumping by exporters from certain geographies on account of the drop in their internal consumption. The business expects that the earnest attempt put in by the business in terms of compliance with the environmental compliance and reduction in carbon footprint reduction would augment the opportunities with external and domestic customers in the coming years.

The Russian subsidiary ran at near full capacity. The business recorded higher sales in local currency compared to last year on account of sales volume, price realisation and mix resulted in sales growth. On full year basis, the mix towards Russia sales volumes domestically has increased to 59% compared to 57% during last year and which used to be around 45% before Russia-Ukraine conflict.

The Zirconia business at Foskor Zirconia reported lower sales on account of postponement of offtake by their major customers and price pressure from Cross border supplies.

Manufacturing

Manufacturing strategies focused mainly on improving throughout by efficient operations supported by waste reduction through TPM initiatives and value creation through grain treatments. Continued focus on innovation, TPM measures

enabled the business to be competitive and efficient in bettering its performance. The focused Joint Development Programs in selected areas with customers brought faster scaling up and co- solutions. Attempts on new product development and speedy resolution of customer complaints would yield further results in the coming days.

During the year Kakkanad won Kerala Industrial Safety awards under category 5, CUMI Edapally won the award for outstanding safety performance (Sreshta Suraksha Puraskar) in the 53^rd National Safety Day celebrations under the small factories category, Boehmite plant won the same award under micro factories category, while WFA SEZ plant won Suraksha Puraskar award under micro factories category. The boehmite plant won the F&B safety award under toolbox talk category and CUMI Edappally plant team won the second prize for the tabletop mock drill event in the National Safety Day celebrations.

The investment made in grain processing and material handling in plant 1 and plant 2 have resulted in increasing material availability. This would further enhance the critical grit availability of WFA and BFA from Minerals business. The establishment of alternate materials for quartz and carbon would support the Silicon Carbide business to be competitive and environmentally compliant. Business has also embarked on a project for controlling the emissions in SiC operations in line with its commitment to emission control and safety compliance in plant operations.

The year saw volatility in the availability and price of critical raw materials like Alumina, and the continued dumping of materials from other jurisdictions across product segment would be addressed through efficiency improvement, usage of alternate materials etc.

Foskor Zirconia, which is into production of Monoclinic Zirconia and Calcia Stabilised Zirconia had lower sales compared to last year which led to lower utilisation. The Silicon Carbide operations at VAW were at their full capacity. Sales volumes from all 3 segments - Silicon Carbide, Abrasives and Refractories - grew compared to last year.

The business has started commercial sales of Graphene variant from its facility and has identified various applications where a potential scaling up is imminent. The production trial of High Purity Silicon Carbide has been completed and initial sales also started with select customers.

Key Financial Summary

FINANCE

During the year, the Company generated ^4008 million cash surplus from its operations on a standalone basis. All debts have been serviced on time. The Company was a debt free company as on 31^st March 2024. The capital expenditure program of ^1235 million and investments in subsidiaries of ^11 million were financed from internal accruals.

The Company continued to have a reasonable cash generation during the year, due to prudent capital expenditure and efficient working capital management. The debt at the consolidated level decreased to ^1127 million. The cash and cash equivalent level (net of borrowings) at a consolidated level stands at ^4422 million.

The debt-equity ratio for the Company was nil at standalone and 0.04% at consolidated level. The Company's Balance Sheet remains robust and it augurs well for the growth in the prevailing conditions.

The credit ratings of the Company, 'A1+' for short-term borrowings and 'AA+ Stable' for long-term borrowings were re-affirmed by CRISIL. Over the years, the Company has been resorting to a prudent mix of rupee and foreign currency borrowings to finance its operations and achieve a reduction in financing costs. The finance cost at a standalone level is at ^42 million compared to ^150 million last year. The Company earned ^11 million by investing surplus cash available for short term.

At a consolidated level, the finance cost reduced to ^183 million from ^235 million. The decrease in borrowings has resulted in lower finance costs. The capital expenditure program of ^2353 million was financed majorly out of internal accruals.

With the Indian entity enjoying a significant natural hedge, a cautious approach was adopted to hedge the remaining exposures. The Company adopts prudent tax management policies.

There are no material changes and commitments, affecting the financial position of the Company which have occurred between 31^st March 2024 and the date of this Report.

INDIAN ACCOUNTING STANDARDS (IND AS) - IFRS CONVERGED STANDARDS

The Company, its Subsidiaries, Joint Ventures and its Associates in India adopted lnd AS with effect from 1^st April 2016 pursuant to the Companies (Indian Accounting Standard) Rules, 2015 notified by the Ministry of Corporate Affairs on 16^th February 2015.

INTERNAL CONTROL

The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. The controls have been designed and categorised based on the nature, type and risk rating so as to effectively ensure the reliability of operations with adequate checks and balances. The Internal Audit team - external as well as internal evaluates

the effectiveness and adequacy of internal controls, compliance with operating systems, policies and procedures of the Company and recommends improvements, if any. Significant audit observations and the corrective/preventive action taken or proposed to be taken by the process owners are presented to the Audit Committee. A periodic review of adherence to the agreed action plan is carried out. The scope of Internal Audit is annually determined by the Audit Committee considering the inputs from the Statutory Auditor and the Management.

Capital and revenue expenditures are monitored and controlled with reference to approved budgets. Investment decisions are subject to detailed evaluation and formal approval according to schedule of authority in place. A periodical review of capital expenditure with reference to benefits forecasted is done. Physical verification of assets is also periodically undertaken.

The Audit Committee reviews the overall functioning of Internal Audit on a periodical basis. The Committee also discusses with the Auditors periodically their views on the financial statements including the financial reporting system, compliance with accounting policies & procedures, adequacy and effectiveness of the Internal Control Systems in the Company.

During the year, the Board basis the recommendation of the Audit Committee had re-appointed M/s. Deloitte Touche Tohmatsu India LLP as Internal Auditors of the Company.

INTERNAL FINANCIAL CONTROLS

Internal Control is a process, effected by an entity's Board of Directors, Management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting and compliance - as defined by the Committee of Sponsoring Organisations (COSO) of the Treadway Commission (appointed by SEC, USA).

As per Section 134(5)(e) of the Companies Act, 2013, the term 'Internal Financial Controls' (IFC) means the policies and procedures adopted by the Company for ensuring:

(a) orderly and efficient conduct of its business including adherence to company's policies;

(b) safeguarding of its assets;

(c) prevention and detection of frauds and errors;

(d) accuracy and completeness of the accounting records; and

(e) timely preparation of reliable financial information.

The three key components of IFC followed by the Company are:

i. Entity Level controls (ELC) that the Management relies on to establish the appropriate "tone at top" relative to financial reporting are - Code of Conduct, Enforcement of Delegation of Authority, Hiring and Retention practices, Whistle blower mechanism and other approved policies and procedures.

ii. Process Level controls (PLC), to ensure that processes are predictable, stable and consistently operating at the targeted level of performance, with only a normal variation are classified into Manual or IT - Dependent or

Automated Controls. They are also classified as Preventive or Detective.

iii. General IT Controls to ensure appropriate functioning of IT applications and systems built by the Company to enable accurate and timely processing of financial data are - User Access rights management and Logical access; Change management controls; Password policies and practices; Patch management and License management; Backup and Recovery of data.

The adequacy of Internal Financial Controls is ensured by:

• Documentation of the risks and controls associated with the major processes;

• Validation and classification of existing controls to mitigate risks;

• Identification of improvements and upgrades to the controls;

• Improving the effectiveness of controls on residuary risks through data analytics;

• Performing testing of controls by the independent Internal Audit;

• Implementation of sustainable solutions to Audit observations.

The Audit Committee periodically reviews Internal Financial Controls to ensure that they are adequate and are operating effectively.

HUMAN RESOURCES

The Human Resources (HR) team collaborates with businesses in the execution of their strategies by strengthening the human asset base for delivering high performance. HR Team endeavors to design initiatives for effectiveness, impact, and influence to build talent and capability across different functions and levels. The HR team is not only committed to building the capabilities of human assets but also to firmly establishing practices and processes for institution building.

Living our Values: This year, the Company spent time bringing an awareness and common understanding about our purpose and values to employees. Through 16 workshops across 10 locations covering over 300 employees, we encouraged employees to have honest conversations about their personal values and create an aligned understanding on the Company's values and how to live by the same. The topics covered in the workshop included personal values, psychological safety and deep insights into the Five Lights.

Employee Safety and Health: At CUMI safe workplace is not just a requirement but a fundamental shared value driving our operations. The Company prioritises the safety and well-being of all its employees.

Safety Drives across Businesses: Safety is a top priority and considering the growing significance of EHS in running operations in a sustainable manner, the entire organisation

structure was reviewed and a dedicated EHS function has been established to promote the culture across the organisation.

An Ergonomic study in the Engineering Ceramic Spark plug crack testing area, a Heat Stress study at METZ 1 Quality final inspection room and periodic Safety Audits and Inspections were conducted at Industrial Ceramics, Hosur. In Electrominerals, a mock drill on workplace safety violations, and a training with demo on 'Working at heights' were conducted in Kakkanad. Training on safe operations in lifting tools & tackles with a mock drill was also conducted. The Company has initiated an e-learning course with assessment on the theme of safety accompanied by an e-certification for employees at Abrasives. At Super Refractories, a 'Powered Air-Purifying Respirator' system in dust prone areas to avoid dust exposures was implemented. The Company also participated in the EHS Excellence award assessment conducted by CII.

Capability Building: The Company's L&D function understands the dynamic nature of business and learning. We therefore, design and deliver interventions to achieve robust competencies and a skilled workforce. The L&D framework is designed in line with our strategic focus areas of our business including productivity improvement, optimising organisation structure, people capability enhancement, talent development and succession planning. We collaborate with business leaders and learners to improve our framework and design contextualised learning interventions which help achieve excellence and build capability in line with business requirements.

Your Own Learning Opportunities (YOLO) - Graduate Engineering Trainees (GET) Programme: a campus-to-corporate programme designed to systematically and effectively manage the transition of newly joined Graduate Engineers into the workplace. YOLO is a year-long development journey covering role grooming, capability building, function orientation & preparation to take on roles. During the year, 19 GETs who have joined us are currently undergoing the programme.

CUMISEAD: a customised program for first time managers and individual contributors. This programme was rolled out with the objective of enhancing self-awareness, improving interpersonal effectiveness, and driving impactful results through systematic and structured behavioral tools and techniques. The intervention started with a "Manager as Coach" workshop to help the reporting managers coach participants through the 6-month learning journey. The program is a combination of classroom training, assignments, action learning projects, and one-on-one coaching sessions. Three batches have been completed, covering 64 employees across Abrasives, Super Refractories, Industrial Ceramics, Electrominerals businesses, and Wendt (India) Limited. All the participants have taken an action learning project based on the learned competencies.

Value Selling: a customised program for Sales and Marketing employees conducted for Abrasives, Industrial Ceramics & Super Refractories.

The programme's objectives include:

• learn a structured process of value selling

• understand the logical framework to sell premium offerings and solutions

• build confidence to be able to sell premium

• sell solutions and not mere products

• present the value of craftsman automation in a structured manner

Over a 10-month period, 111 employees in the Sales & Marketing function across Abrasives, Industrial Ceramics & Super Refractories were covered. Participants learning implementation was reviewed by Business Heads, HR Head and Faculty.

Need Based Interventions: These individual-focused

programmes (sometimes Business Unit - specific) are designed to enhance functional competencies and capabilities.

Training Need Identification Process: Training needs and learning goals are collated from discussions with Business as well as the performance management process. Accordingly, the Company's Annual Training Calendar (ATC) is developed. Training programmes are thus customised and categorised as Behavioural, Technical & Generic programmes. During FY 2023-24, 15 programs like Design of Experiments, Quality Function Deployment, Cost Effective Automation, Problem- Solving Techniques, 7 QC Tools & Problem Solving Tools, APQP & Total Cost Management in Technical/Functional and Managerial Effectiveness, Time Management, Communication and Presentation skills, Relationship Management, Strategic Thinking & Influencing Skills in Behavioural were conducted.

Catalyst is a voluntary, self-directed mentoring programme where employees directly sign up for dialogues with mentors, continued its role in people development. During the year, we have assigned Catalyst mentors to 19 Graduate Engineer Trainees.

Digital Initiative: In September 2023, the Company successfully implemented a new Learning Management System (LMS) - CUMIverse. In today's rapidly evolving digital landscape, the implementation of LMS is not just a strategic decision but a vital necessity.

CUMIverse signifies our commitment to leveraging cutting- edge technology to streamline learning processes, facilitate knowledge dissemination, and empower our workforce in this digital era. CUMIverse enables us to optimize resource utilisation, track progress, and adapt swiftly to changing business needs.

Over 30 e-learning modules in Behavioral, Technical, and Functional are available on the platform.

The CUMIverse boasts of superior features with User-Friendly Interface, Personalised Learning Paths Multiple Training Modes, Learner Engagement and effective tracking mechanism.

Orgvantage: CUMI had implemented Orgvantage survey - a diagnostic tool to understand the employee's perception on various advantage drivers namely customer centricity, innovation, talent advantage, execution certainty, digital advantage and speed. 876 employees of CUMI and its Joint Ventures & Subsidiaries participated. The results are worked on to initiate actions towards building an engaged workforce.

Every quarter, the Company recognises and rewards employees across functions for completed projects in the previous quarter. These projects include Cost Saving, First Time Right, New Product Introduction establishment, Sales topper (region-wise), Best support to business, Best New Product Introduction / New Product Development Launch and Process improvement projects. 'You made a difference' is a quarterly recognition programme conducted in Electrominerals Business to recognize special contributions of employees.

During the year, every business celebrates days of importance including Independence Day, Ayudha Pooja, Safety Week, Quality Month, Republic Day, and Women's Day.

Additionally, various sports activities were conducted across our plants for our employees physical well-being. Winners and winning teams are recognised with prizes and certificates. The Company actively promotes employee participation in various marathon competitions. In FY 2023-24, we have sponsored three marathons with over 100 employees participating.

CUFEST: The Company's Annual Fest is both a competition and a celebration of our quality and best practices across businesses and geographies. During this intensely competitive and much- awaited event, teams of employees from all businesses compete in the categories of SGA (Small Group Activity), Kaizen, CFT (Cross Functional Team), Innovation in Product and process, and functional excellence like HR, Sales and Marketing, Application Engineering, IT & Digital, SCM & Commercial, and Finance. The jury consists of prominent industry experts. A total of 380 employees participated from the Company, its Subsidiaries and associates and 201 employees emerged winners across different categories.

Muthiah Memorial Business Excellence Award (MMBEA):

This award has been instituted in memory of the late Shri MM Muthiah, former Managing Director who implemented many new projects, thus laying a strong foundation for the Company's future ventures. The MMBEA recognises our Business Units' consistent pursuit of business excellence. In the year 2023, Industrial Ceramics won in the large business category and Murugappa Morgan Thermal Ceramics Limited won in the small business category.

Employee Relations

Maintaining cordial employee relations is crucial for fostering a positive work environment and maximising productivity. To prioritise this aspect in the organisation, we have open communication, employee recognition and appreciation, conflict resolution mechanisms, work-life balance initiatives,

training and development opportunities, fair and consistent treatment, employee involvement and empowerment, social and recreational activities. In 2023, we signed long term settlement in Electrominerals Division, Koratty.

Talent Acquisition & Talent Management

Hiring fresh talent and developing future leaders, especially at the middle management level, demonstrates a forward-thinking approach to talent management and succession planning. Implementing robust recruitment and selection processes to identify high-potential candidates who align with the Company's values and long-term goals. Developing a thorough onboarding process ensures a smooth transition for new hires into the organisation. This includes orientation sessions, introductions to key stakeholders, plant visits and providing resources and support to familiarise with their roles and responsibilities.

Identifying high-potential employees at the Deputy Manager level is a strategic move to nurture future leaders within the organisation. The identification has been done through Performance-Potential Matrix. The performance data over the past two years was considered. The potential for future growth was identified with an external tool to access the Intelligence. The Individual Development Plan (IDP) has been completed for all the Hi-Potential employees in collaboration with their reporting managers. It enabled discussions on areas like career aspirations, strengths, areas for development, and long- term goals. The quarterly review of the IDPs have also been completed. The progress on the IDP journey is also measured by the employee's growth and progress in the current role and identifying potential future roles for movement. This ensures a strong talent pipeline for sustained organisational success.

Performance Management System (PMS)

To drive a performance-oriented culture within the organisation, the comprehensive performance management and reward system has been reviewed and improved. By completing the goal-setting process for 2023-2024 and the appraisal process for 2022-2023 in July 2023, the employees have been facilitated with clear objectives aligned with organisational goals and they receive timely feedback on their performance. Following the performance appraisal process, rewards are distributed among qualifying employees based on the Performance Appraisal and Review Committee (PARC) review & recommendations. These rewards include salary revisions, promotions, salary corrections for critical talent, and one-time cash rewards for exceptional contributions.

The introduction of an online mid-year feedback process enhances the performance-oriented culture by providing employees with regular feedback on their performance. This process also promotes transparency and trust by allowing employees to see feedback and comments online from their reporting managers and providing an option to agree or disagree. Disagreements are addressed through facilitated discussions involving the Reviewing Officer and HR, wherever required.

A compensation benchmark study was also done using an external agency to ensure that remuneration structure of the Company is aligned with the market trend. Incentive payouts have been made based on the Balanced Scorecard (BSC), which aligns individual performance with organisational objectives and Key Performance Indicators (KPIs).

Mid-term review also provides for remuneration review, and promotions, ensuring that employees are recognised and rewarded for their performance and contributions on time, further reinforcing the performance-oriented culture.

These initiatives demonstrate our commitment to fostering a culture of performance excellence, transparency, and fairness in its reward and recognition practices. By aligning performance management processes with organisational goals and providing opportunities for ongoing feedback and development, the Company effectively motivates and retains talent while driving strategic objectives.

COMMUNICATIONS

A robust and effective communication function plays a pivotal role to align people to the organisation's purpose and build a collaborative culture. In the past year, there has been a clear rhythm and channels to enable connection and collaboration from the shop floor to the Board room. Each initiative has a defined frequency thus establishing a communication rhythm to engage, build trust and alignment.

CUMI Samachar: Quarterly business update which contains highlights and a quote from each Business Head worldwide.

Social Media Management - LinkedIn: Built a unique look, feel and tone of voice for the digital medium. Focused on creating people- and brand-centric messages - through micro-interviews, employee & product posts, and brand information, re-engineered the Company's social media image and built visibility for the brand among the target audience.

In 2023-24, we have acquired 15,636 unique visitors (individuals who visit LinkedIn pages or profiles for the first time within a particular timeframe). The 56 posts we have published have had 184,750 unique impressions (Number of times posts were shown to unique signed in members). This has led to 3,752 new followers being added organically.

Communication Town Halls: Conceptualised, redesigned the Managing Director's virtual half-yearly organisation-wide communication meetings for a global audience. Styled as dialogues, these meetings were streamlined to be precise, sharp, clarifying and engaging.

Synchronicity: Created a platform to reinforce the innovation culture in the Company through strong networked teams. Synchronicity has become a fraternity for the Technologists across the Company and its subsidiaries. Every month, they come together to present the progress of their long-term strategy projects as well as the learning experiments conducted. Colleagues across businesses have gotten to know each other,

their work, achievements and build networks of extended resources to lean on for dialogue, solutions and project support.

ACHIEVEMENTS AND AWARDS

The Company continued to be a proud recipient of several awards and recognitions reiterating its commitment to excellence.

• CUMI has been recognised as one of the Best Managed Companies by Deloitte India.

• The Electrominerals business of the Company obtained a Bronze rating from Ecovadis for its sustainability practices, and has also received the National Energy Management Award from Dr. Ashok Kumar, DG of the Bureau of Energy Efficiency, Delhi.

• Long-term partnership Award from SMS group for servicing OEM for servicing OEM over the last 25 years as a reliable partner for Wear Protection in the Steel Industry in India and Russia.

• The Abrasives business received oSa certification for its Maraimalai Nagar and Uttarakhand Plants.

• Abrasives was awarded the Manufacturing Champion Award in the Merit category for Total Cost Management.

• Boehmite plant won the same award under the micro-factories category.

• WFA SEZ plant won the Suraksha puraskar award under the micro-factories category.

• Boehmite plant was awarded the F&B safety award under the toolbox talk category.

• The Ceramics business received the "Industry Disruptor" Award from Autodesk Imagine.

• CUMI Won 2^nd place in 33^rd National Award for Innovative Training Practices - 2022-23 conducted by Indian Society for Training & Development.

The total staff on rolls of the Company (including Joint Ventures and Subsidiaries) as at 31^st March 2024 was 6191 with 3806 employees in India (previous year 6015 with 3771 employees in India).

PERFORMANCE OF SUBSIDIARIES

The Russian subsidiary recorded sales of 9716 million rouble against 8067 million rouble during the previous year. Sales grew by 20%, which includes, 15% due to product mix, exchange rate, and price realisation and 5% because of volume increase. The operations are running well and there has been an increase in sales volumes compared to last year: 4% in Silicon Carbide, 15% in Abrasives and 6% in Refractories. However, when converted to INR, it shows downward performance because of stronger Rouble during FY23 where it was at one Rouble equivalent to ^1.23 on an average, whereas it has become much weaker at ^0.92 in FY24. Profits increased significantly to 1612 million rouble compared to 1239 million rouble during last year. Capacity utilisation is very good and VAW was able to sell more in Russia.

Foskor Zirconia, South Africa, recorded a sale of ZAR 379 million compared to ZAR 440 million in the previous year. This is majorly on account of postponement of offtake by their major customer and price pressure. The loss after tax stood at ZAR (17) million against ZAR 60 million in the previous year. This was because of lower sales; intentional price drops to compete in the market and increased input costs.

In CUMI Australia, the business in Lined Equipment continued to be good on the back of an increase in demand for mineral processing. The Company's revenues grew from AUD 30.1 million to AUD 34.7 million registering the highest recorded revenues in the Company. Profit after tax was AUD 4.9 million against AUD 3.6 million during last year.

Sterling Abrasives reported marginal growth in revenues at ^1410 million compared to last year's sales of ^1381 million. Profits after tax decreased to ^139 million from ^165 million. Continuing higher Agri acreage owing to good monsoon conditions, higher reception for certain new products among end users as well as enhanced exports helped growth in sales.

Post the conscious call of tapering down the operations in CUMI Abrasives and Ceramics Company Limited (CACCL), the subsidiary in China, the market is being served directly from India.

The sales of CUMI America during the year improved to USD 20 million as against USD 18 million last year, driven by an increase in sales of both Bonded Abrasives and Industrial Ceramics thereby improving profits. The profit after tax decreased from USD 2.16 million to USD 2.07 million.

For CUMI Middle East, sales decreased from USD 1.0 million to USD 0.4 million. Loss for the year was at USD 0.15 million against a profit of USD 0.13 million during the previous year.

Southern Energy Development Corporation Limited (SEDCO), the gas-based power generation subsidiary recorded a sale of ^327 million as against ^259 million last year. The business made a loss after tax of ^122 million as compared to loss after tax of ^44 million during last year on account of the significant increase in gas prices and other generating & transmission charges, and one-time non-operational loss of ^64 million.

Net Access India Limited, which provides IT facility management and other allied services de-grew from ^585 million to ^573 million. The profits de-grew from ^34.4 million to ^33.9 million.

CUMI International Limited, Cyprus recorded a revenue of USD 4.9 million representing mainly dividend income as against last year's income of USD 6.1 million.

CUMI Europe s.r.o. is not in operation.

PLUSS Advanced Technologies Limited recorded a revenue of ^617 million as against ^542 million for the previous year and loss after tax for the year was at ^128 million as against ^137 million (post acquisition) for the previous year under acquisition accounting. Losses for the current year were reduced from ^38 million to ^31 million on an actual basis.

CUMI Awuko Abrasives GmbH recorded sales of EUR 9.1 million sales, which is 3% lower compared to last year and the losses at EUR 2.25 million against EUR 3.67 million during last year.

Rhodius Abrasives GmbH sales dropped by 2% to EUR 63.3 million from EUR 64.5 million during last year. Due to the softening of demand in parts of Europe, there was a drop in volume to an extent of 8%, while price mix and price enabled a 6% gain resulting in net drop of 2%. The loss after tax was EUR 1.5 million against loss of EUR 3.7 million during last year.

The interesting point to note here is that if we exclude PPA write off of EUR 2.8 million, Rhodius was close to break-even operationally.

Rhodius Schleifwerkzeuge Verwaltungsgesellschaft mbH (RSV), Germany is a subsidiary of RAG and during the year the merger of RSV with RAG was approved and published in the commercial register in line with the German regulations. As a consequence of this merger, RSV ceased to be a subsidiary of the Company.

ENTERPRISE VALUE ADDITION

The Company has been able to continuously add value, the summary of which is given below: (^ Million)

- Gross value added is Revenue Less Expenditure (excluding depreciation + expenditure on Employees & Directors' service + Long term interest)

- Payment to Government is Current tax + Dividend distribution tax.

- Towards replacement and expansion is Retained earnings + Depreciation + Deferred tax.

RISKS, CONCERNS AND THREATS

The Company has constituted a Risk Management Committee aligned with the requirements of the Companies Act, 2013 and Listing Regulations. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

The Company has a robust business risk management process to identify, evaluate and mitigate risks impacting business including those which may threaten the existence of the Company. This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance the Company's competitive advantage. This also defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risk trends, exposure, and potential impact analysis at a Company level as also separately for the business segments. The Company also has developed a structured risk management policy encompassing the risk management objectives, principles, process, responsibility for implementation, maintenance of risk registers, review of risk movements, risk reporting framework etc. The Risk Management Committee continued to review the risks and mitigation plan as per the adopted Charter and Risk Management Policy. The Enterprise Risk Management (ERM) framework which was reviewed and upgraded last year is now automated. While the Committee continued to review the risks and mitigation plan as per the adopted Charter and Risk

Management Policy, during the year, the development plan for the cyber security framework for the Company was considered by the Committee. The Cyber security framework developed last year is under review for alignment with the overall digital strategy and roadmap identified for transformation as a part of Long term strategy. Hence, the Company is in process of establishing a IT security framework commensurate with its size and operations and the next few years will be working on the implementation of the framework and its gradual extension to global entities. Besides this, the review of geopolitical risks in the volatile global market conditions and periodic risk register review continued.

Mr. P Padmanabhan, Chief Financial Officer has been identified by the Board to lead the risk management function as the Chief Risk Officer of the Company from 4^th May 2024.

Risk management also forms an integral part of the Company's business plan.

The Company operates across various technology platforms and product verticals built over the years. Relative advantages and disadvantages of such technologies are studied and advances are tracked. Any new technology may impact the performance of the Company in the long run. The Company seeks to address these technology gaps through continuous benchmarking of the existing manufacturing processes with developments in the industry and in this connection has made arrangements with technical research institutions and technology consultants. The Company continues to make investments in the next level

of Industry 4.0 in select modules. Industry 4.0 is the current trend of automation and data exchange in manufacturing technologies.

The requirements of power for the Company are majorly driven by the requirements of the Electrominerals business. The power requirement is partly met out of own generation from the Maniyar Hydroelectric plant. The entire production of power from Maniyar is utilised by the Electrominerals business. Apart from this, electricity is generated at the Company's subsidiary SEDCO and consumed at all its locations in Tamil Nadu. The rest of the requirement for electricity is managed by purchase from respective State Electricity Boards. Utilisation of power remains one of the key factors which can impact profitability either favourably or adversely based on the changes in the power cost. Pending the extension of the tenure for the hydroelectric project in Kerala which is due for renewal in 2024 as well as the pressure on the gas based electricity business in SEDCO and as part of its strategy to build competitiveness, the Company continues to look for opportunities to add to its captive power generation including green power in terms of Solar. Recently, Electrominerals business has commissioned a 1.8 MWp ground mounted solar power system at its plant in Edappally. In parallel, businesses are exploring to increase the share of cleaner sources of energy through power purchase agreement with third parties. In Russia, the Silicon Carbide operations which also consumes large quantities of power sources it from local utility. In India, the Company is also exploring alternate power sources and towards this has commenced installation of clean energy sources such as solar for its captive consumption. Around 1.5 MWp capacity of solar systems (owned and operated by SEDCO) at various factory locations of the Company, generated around 17,00,000+ units of electricity from cleaner sources in FY24, equivalent to saving 19,800 trees and reducing 685 Tons of CO2 emissions. Also, the Company's subsidiary, SEDCO which was generating gas based electricity expanded its business model to service customers for solar based electricity, thus reducing the dependence on a single source of energy.

The requirement of fuel is driven by the high-temperature processes in the Abrasives and Ceramics businesses and any increase in the cost of fuel impacts profitability. Hence, the Company has put in place plans and implemented energy conservation measures to improve its competitiveness. Kindly refer Annexure D of the Directors' Report for energy conservation measures undertaken.

The Company uses various raw materials such as Bauxite, Calcined Alumina, Zirconia sand, Raw Pet coke, Quartz and Graphite which have high price volatility. This is addressed through annual contracts to cover volatility due to price fluctuations and also mitigated through programs to identify alternative sources. The severe price discrimination in the markets caused by players in geographies outside of India is impacting the business and there is a need for suitable policy interventions to protect the local manufacturers.

The Company deals with multiple currencies and is thus exposed to exchange risk on account of adverse currency movements. Foreign Exchange risk in foreign denominated loans, imports and exports is mitigated by adopting a country-based forex policy, periodic monitoring and use of hedging instruments. Efforts are being taken to manage both exports and imports to ensure that at a Company level, there is a natural hedging mechanism.

As a risk mitigation measure to address cyber security threats, the Company does quarterly penetration assessment testing for all internally and internet-facing applications. The security threat awareness is periodically published to create awareness among employees and stakeholders for handling the risk proactively. The security process is included as an important step in the IT policy of the Company. There is a considerable amount of work undertaken on scoping of information specific to the role defined to prevent any data or information leak, through continuous monitoring on the business-critical IT assets. Considering in some locations the hybrid mode of work has become the new normal, data security and protection against the risk of phishing, malware attacks were given priority. Awareness mailers were disseminated across to mitigate risk of such attacks and a requisite infrastructure upgrade to support the remote working conditions in a secured manner was initiated.

As mentioned earlier, the Company has established a cybersecurity framework as a part of its IT Strategy. We are partnering with external expertise to assist in deployment of this framework for both IT and OT capabilities.

The Company's input materials are not commoditised and do not warrant any specific hedging to be undertaken. With respect to output materials, adverse impact of changes in commodity prices on user industries could impact the sales which are mitigated by the development of alternate products, establishing a new range of applications etc., as detailed above. The other mitigation measures for dealing with increase in fuel costs, non-availability of raw materials etc., have been dealt with separately in above paragraphs.

The risks associated with COVID-19 pandemic are considerably reduced. However, pandemic risk is now an identified risk with appropriate mitigation plans. The priority for the Company continues to be the safety and health of all its employees and other stakeholders with minimal disruption to operations.

The COVID-19 pandemic is on a decline and globally the situation has returned to almost normalcy. Hence the risks associated with the same reported until 2022 is not being specifically disclosed in this Report. However, the risks across operations, human resources, IT, supply-chain etc., which were identified earlier and which could potentially impact in the event of an emerging variant or any subsequent pandemic and the mitigation plans continue to be on the risk radar of the Company.

BUSINESS OUTLOOK AND OPPORTUNITIES

Robust high-frequency indicators of the Indian economy underpin the strong growth momentum and are expected to be in an expansionary zone in the coming years. The government's sustained emphasis on capex and improving external situations will bolster the economic momentum. Also, the government has focused on sectors that can capitalise on India's competitive advantage in resources and skills, tap into local-market opportunities, and help the country climb higher on the manufacturing value chain globally. The Production Linked Incentive (PLI) scheme, tax incentives, the ease of effecting business reforms, the national infrastructure program, and the national logistics plan had been announced with the intent to boost manufacturing, improve logistics to reduce costs and save resources, and gain from positive externalities. Notwithstanding the same, the Company continues to explore and identify alternate and new opportunities for its various product segments across all its businesses in sectors including Clean energy, Semi-conductors, Defence, Digital, etc., to drive growth.

The Company continued its focus on growth from core businesses, expansion through acquisitions, and working on emerging areas like Clean energy, Electric mobility, Semi- conductors, and Advanced manufacturing. The key strategies have been outlined in the Performance of Business Segment section.

FIXED DEPOSITS

The Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act,

2013 read with Companies (Acceptance of Deposits) Rules,

2014 and no amount of principal or interest was outstanding as on the Balance Sheet date.

LOANS AND INVESTMENTS

The particulars of loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 are given below:

(^ Million)

RELATED PARTY TRANSACTIONS

The Company as per the requirements of the Companies Act, 2013 and Regulation 23 of the Listing Regulations has a Policy for dealing with Related Parties. The Securities and Exchange Board of India vide the SEBI (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2021 notified on 9^th November 2021 has significantly amended the monitoring framework for dealing with Related Parties by listed entities.

Consequentially, the Company has amended its existing policy on dealing with Related Parties on 29^th March 2023 duly factoring the processes and procedures to be established to supervise the expanded list of transactions with the extended list of Related Parties.

In line with its policy, all Related Party transactions both under the Companies Act, 2013 as well as the Listing Regulations are placed before the Audit Committee for its review and approval. Prior approval of the Committee is obtained on a quarterly basis for transactions that are foreseen and are repetitive in nature. Omnibus approvals in respect of transactions that cannot be foreseen are also obtained as permitted under the applicable laws and the thresholds are periodically reviewed. The list of Related Parties is reviewed and updated periodically as per the prevailing regulatory conditions. Considering the enhanced regulatory purview of monitoring the related party transactions at the subsidiary level, compliance awareness sessions continue to be conducted across the organisation including the subsidiaries as well as establishment of a reporting framework by the subsidiary companies, both overseas and domestic.

The details of transactions proposed to be entered into with Related Parties are placed before the Audit Committee for approval on an annual basis before the commencement of the financial year. Thereafter, a statement containing the nature and value of the transactions entered into by the Company with Related Parties is presented for quarterly review by the Committee. Further, revised estimates or changes, if any to the proposed transactions for the remaining period are also placed for approval by the Committee on a quarterly basis. Besides, the Related Party transactions entered during the year are also reviewed by the Board on an annual basis.

During the Audit Committee meeting held on 25^th March 2024, the estimated transactions of the subsidiary companies with their Related Parties as well as those envisaged with the Related parties of the Company were placed before the Audit Committee of the Company. The approval of estimates and revisions to this list of transactions is planned in the same manner as done for the parent company (detailed above).

All transactions with Related Parties under the Companies Act, 2013, entered during the financial year were in the ordinary course of business at arm's length and hence, no particulars are required to be entered in the Form AOC-2. Further, all transactions entered into with Related Parties during the year even at arm's length basis in the ordinary course did not exceed the thresholds prescribed under the Companies (Meetings of Board and its Powers) Rules, 2014 or Listing Regulations or the Company's Policy in this regard and hence, no disclosure was required to be made in Form AOC-2. Accordingly, there are no contracts or arrangements entered into with Related Parties during the year to be disclosed under Sections 188(1) and 134(3) of the Companies Act, 2013 in Form AOC- 2. The form is enclosed as Annexure E to this report.

There are no materially significant Related Party transactions made by the Company with its Promoters, Directors, Key Managerial Personnel or their relatives which may have a potential conflict with the interest of the Company at large.

The Company's policy on dealing with Related Parties as approved by the Board is available on the Company's website at the following link https://www.cumi-murugappa.com/wp-content/ uploads/2023/05/Policv-on-Related-Partv-Transactions.pdf. None of the Directors and KMPs had any pecuniary relationship or transaction with the Company other than those relating to remuneration in their capacity as Directors/Executives and corporate action entitlements in their capacity as shareholders of the Company.

CORPORATE SOCIAL RESPONSIBILITY

All Corporate Social Responsibility (CSR) activities undertaken by the Company are rooted in the principle, "towards prosperity in harmony with people and planet". The Company believes that social responsibility is not just a corporate obligation that has to be carried out, but rather an opportunity to make a difference. All the CSR programmes are aimed at inclusive growth and sustainable development of the community.

The Company continues to engage in Corporate Social Responsibility activities directly as well as through implementation agencies registered with the Central Government, in line with its stated CSR policy.

The economic growth of India has gained considerable momentum in the last two decades and the manufacturing sectors have shown a great deal of buoyancy. However, despite the vast young population, there is a huge mismatch between the skill requirement for the industries and available skilled manpower. The huge number of people entering industrial employment every year and their low preparedness vis-a-vis the growing demand for skill is a concern to be addressed and in this area, the Company has established its direct CSR programme for skill development of the youth from underprivileged sections of the community.

The Company had set up the CUMI Centre for Skill Development (CCSD) in the year 2012 at Hosur, to build a skill bank of a technically competent and industry-ready workforce from the less privileged sections of society. During the FY 2015- 16, the Company replicated this model in Edapally, Cochin. During the FY 2018-19, the Company along with its Joint Venture - Murugappa Morgan Thermal Ceramics Limited replicated this model in Ranipet, Tamil Nadu. CCSD provides specialised training based on the National Council on Vocational Training syllabus for rural youth drawn from socially and underprivileged sections of society. Three-year training is imparted with a stipendiary payment and free boarding facilities, thus enabling the enrolled students to earn while they learn. The job-oriented skill training enhances their employability and aids in uplifting their socio-economic status. The technically trained students can be employed by any industrial entity once they complete the training programme. The Company continues to harness the

potential of CCSD centres so far established. The Company takes pride in informing that few students have earned accolades at national/regional level for their par excellence performance in academic and technical areas. However, during the year no fresh intake of students in CCSD, Ranipet was made owing to subdued response due to the nature of courses offered there.

In addition to the CCSD, the Company has also been contributing to the cause of health and education by making grants to AMM Foundation. Further, during the year, grants were also made to Shri A M M Murugappa Chettiar Research Centre (MCRC) for research in environmental studies.

During the year, the CSR activities through agencies in the healthcare sector, Education and Environment study which involved grants for:

Health

The Company continued its support in conducting pediatric cardio surgeries at Sri Sathya Sai Sanjeevani Hospitals. Sri Sathya Sai Health Education Trust established in May 1970 started Sri Sathya Sanjeevani Hospitals in 2012 primarily to address congenital heart disease by providing free medical support including surgery to needy children from economically weaker sections. The year saw a substantial increase in the number of surgeries performed by the sponsorship of the Company.

Support to G.Kuppuswamy Naidu Memorial Hospital Trust, Coimbatore: The Trust had been set up in 1948 and in the year 1952 established not for profit hospital. The Oncology department is well established and caters to the needs of treating nearly 6-70 children under the pediatric oncology department. This is provided free of cost for children between the ages of 0 to 18 years from less privileged sections of society. The support of the Company was used for the benefit of 25 children.

Education(AMM Foundation)

The grant to AMM Foundation towards education sector was through contributions to Vellayan Chettiar Higher Secondary School, Tiruvottiyur (VCHSS) - which has been making a difference in the field of education for over 50 years. The school runs with the vision - to provide Quality Education with good virtues, for the underprivileged and marginalised communities around Tiruvottiyur. As part of Skill development, a CSR Spend is made towards coaching the students of Murugappa Youth Football Academy (MYFA) by engaging BVB Febballakademie GmbH, a firm from Germany specialised in football coaching. The objective of MYFA is to:

• provide quality grassroot level football coaching to children from economically disadvantaged communities.

• To impart life skills like honesty, discipline, leadership, teamwork, respect etc. through the medium of football and sport.

Environment

Shri AMM Murugappa Chettiar Research Centre (MCRC), Chennai is a non-Governmental voluntary,non-profit research organisation, established in 1973 and registered under the Societies Registration Act of 1860. MCRC is recognised by the Department of Scientific and Industrial Research (DSIR), Government of India, as an independent Scientific and Industrial Research Organisation (SIRO). MCRC was a Technology Resource Centre for Council for Advancement of People's Action and Rural Technology (CAPART), Government of India and continues to strive for Excellence in Rural Development under Department of Science and Technology (DST) Core Support Programme.

MCRC strives to develop sustainable solutions using appropriate science and technology interventions with key focus areas of Food, Energy and Environment for the Development (FEED) of rural India. To realise this goal, the Centre has been working on research programmes that focus on minimisation of chemicals and water use in agriculture, effective utilisation of bioresources including microbials and creating wealth from waste for development of eco-friendly products.

During the year, the Company supported MCRC for Research and Development on Impact of Climate Change on Biodiversity. The project objectives are:

• Climate change studies through marine research in Lakshadweep.

• Climate change studies through marine ecosystem research in Andaman islands.

• Cultivation and conservation of Traditional rice varieties.

Apart from the above, the Company had undertaken local community assistance programmes at various plant locations which included Education & Child development, Health care, Youth empowerment, Women empowerment, Educational sponsorships of underprivileged children, livelihood programs for women, sports, recreation, and support for basic infrastructure for the public utility and schools, etc.

The Company's CSR policy is available on the Company's website at the following link https://www.cumi-murueappa.com/wp- content/uploads/2024/02/CSR-Policy-2021.pdf Annual report on the CSR activities in the prescribed format is annexed hereto as Annexure B and forms part of this Report.

The Company in line with the Companies Act, 2013, formulated an annual action plan, which was approved by the Board of Directors, in pursuance of the CSR Policy of the Company, based on which spending on CSR activities were undertaken for FY 2023-24. The Company spent ^63.38 million towards CSR activities and no amounts remain unspent at the end of the year.

As at 31^st March 2024, the CSR spend made directly and through implementing agencies has been utilised in full and hence, the Company is in compliance with the provisions of Section 135 of the Act and the rules referred therein.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING

The Company's ethical and responsible behaviour complements its corporate culture. Being a public listed company, the Company recognises that its accountability is not limited only to its shareholders from a financial perspective but also to the larger society in which it operates. In November 2018, the Ministry of Corporate Affairs (MCA) constituted a Committee on Business Responsibility Reporting ("the Committee") to finalise business responsibility reporting formats for listed and unlisted companies, based on the framework of the National Guidelines on Responsible Business Conduct (NGRBC). Through its report, the Committee recommended that Business Responsibility Reporting (BRR) be upgraded to Business Responsibility and Sustainability Reporting (BRSR) where disclosures are based on ESG parameters, compelling organisations to holistically engage with stakeholders and go beyond regulatory compliances in terms of business measures and their reporting. SEBI, vide its circular dated May 10, 2021, made BRSR mandatory for the top 1,000 listed companies (by market capitalisation) from fiscal 2023, while disclosure was voluntary for fiscal year 2022. The Company is ranked 254 position as per the market capitalisation at NSE as on 31^st March 2024. The Business Responsibility and Sustainability Report for the year ended 31^st March 2024 in terms of Regulation 34(2) of the Listing Regulations is annexed to this Report as Annexure C and this report describes the initiatives undertaken under the Environment/Social/ Governance aspects.

Board of Directors and Key Managerial Personnel

As at 31^st March 2024, the Board of the Company comprised 7(Seven) Directors of which majority 5 (Five) are independent.

Mr. M M Murugappan, Director retires by rotation at the forthcoming Annual General Meeting and being eligible has offered himself for re-appointment. A proposal for his re-appointment is included in the Notice convening the 70^th Annual General Meeting for consideration and approval by the shareholders.

Further, during the year, Mr. N Ananthaseshan, Managing Director took an early retirement and stepped down from the Board of the Company at the close of business hours of 2^nd August 2023. Mr. Sridharan Rangarajan who was Whole Time Director - Finance and Strategy took over as the Managing Director of the Company from 3^rd August 2023.

The Company has received declarations from all its Independent Directors confirming that they meet the criteria of independence prescribed both under the Companies Act, 2013 and the Listing Regulations. In the opinion of the Board, all the Directors appointed/re-appointed during the year are persons with integrity, expertise and possess relevant experience in their respective fields.

All the Independent Directors of the Company have registered their names in the Independent Director's Databank as required under the Companies Act, 2013 and the Rules referred therein. The Independent Directors are also required to take up an online proficiency self-assessment test within two years from the date of inclusion of their name in the Independent Directors' databank with an exemption provided to Directors fulfilling the criteria prescribed under the Act and the Rules referred therein. The completion of the online proficiency self-assessment test is exempted for most of the Directors. Some of the Independent Directors including those required to do so have completed the self-assessment. Mr. P S Raghavan and Mrs. Soundara Kumar (though being exempt) have completed their proficiency self- assessment within the timelines.

As on the date of this Report, Mr. Sridharan Rangarajan, Managing Director, Mr. P Padmanabhan, Chief Financial Officer and Ms. Rekha Surendhiran, Company Secretary are the Key Managerial Personnel of the Company as per Section 203 of the Companies Act, 2013.

Board Meetings

During the year, 8 (Eight) Board Meetings were held, the details of which are given in the Corporate Governance Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its various Committees as per the evaluation framework adopted by the Board on the recommendation of the Nomination and Remuneration Committee. Structured assessment forms were used in the overall Board evaluation comprising various aspects of the Board's functioning in terms of structure, its meetings, strategy, governance and other dynamics of its functioning besides the financial reporting process, internal controls and risk management. The evaluation of the Committees was based on their terms of reference fixed by the Board besides the dynamics of their functioning in terms of meeting frequency, effectiveness of contribution etc.

Separate questionnaires were used to evaluate the performance of individual Directors on parameters such as their level of engagement and contribution, objective judgement etc., The Managing Director's evaluation was based on leadership qualities, strategic planning, communication, engagement with the Board etc.

The Chairman was also evaluated based on the key aspects of his role. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman, the Board as a whole and the Non- Independent Directors was carried out by the Independent Directors at their separate meeting held during the year.

The Board evaluation process continues to be conducted in a paperless mode.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178(3) of the Companies Act, 2013, the Nomination and Remuneration Committee of the Board has formulated the criteria for Board nominations as well as the policy on remuneration for Directors and employees of the Company.

The criteria for Board nominations lays down the qualification norms in terms of personal traits, experience, background and standards for independence besides the positive attributes required for a person to be inducted into the Board of the Company. Criteria for induction into Senior Management positions have also been laid down.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This Policy is guided by the principles and objectives enumerated in Section 178(4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders. Further details are available in the Corporate Governance Report.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at https://www.cumi- murueappa.com/policies-disclosure/.

Composition of Audit Committee

The Audit Committee of the Board comprises 4 (Four) members and all the members are Independent Directors. Mr. Sanjay Jayavarthanavelu is the Chairman and other members are Mr. Aroon Raman, Mr. Sujjain S Talwar, and Mrs. Soundara Kumar. During the year, five (5) Audit Committee meetings were held, the details of which are provided in the Corporate Governance Report. Mr. Sridharan Rangarajan who was part of the Committee, voluntarily stepped down from the same after taking charge as the Managing Director of the Company.

Statutory Auditors

In line with the requirements of the Companies Act, 2013, the Company, with the approval of the shareholders at the Annual General Meeting held on 1^st August 2022, re-appointed M/s. Price Waterhouse Chartered Accountants LLP (Reg. No. FRN 012754N/N500016) (PWC) as the Statutory Auditors of the Company to hold office from the conclusion of 68^th Annual General Meeting until the conclusion of the 73^rd Annual General Meeting (AGM) on a remuneration of ^75,00,000/- (excluding out of pocket expenses incurred by them in connection with the Audit and applicable taxes) for the FY 2023-24 and the remuneration decided by the Board for the subsequent years based on the recommendation of the Audit Committee.

As required under Regulation 33 of the Listing Regulations, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Report given by M/s. Price Waterhouse Chartered Accountants LLP on the Financial Statements of the Company for the year ended 31^st March 2024 is provided in the financial section of the Annual Report.

There are no qualifications, reservations, adverse remarks or disclaimers given by the Auditors in their report. The auditors have commented on the availability of the audit trail to which the Company's response is as follows:

The Company's ERP RVW6X which is the key accounting software for maintaining books of account has feature of recording audit trail at transaction and database level. The transactional level log was available as a part of initial deployment. With new audit requirement, table level audit trail was activated during the year to track changes at the database level and was made available from 6^th November 2023.

During the year under review, the Auditors have not reported any matter under Section 143(12) of the Companies Act, 2013, and hence there are no details to be disclosed under Section 134(3)(ca) of the Act.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013, read with Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Company is required to maintain cost accounting records in respect of products of the Company covered under CETA categories like Organic and Inorganic chemicals, Electrical or Electronic machinery, Steel, Plastic and Polymers, Ores and Mineral products, other Machinery, Base Metals etc. Further, the cost accounting records maintained by the Company are required to be audited.

The Board, on the recommendation of the Audit Committee, had appointed M/s. S Mahadevan & Co. (Firm No. 000007), Cost Accountants, Chennai to audit the cost accounting records maintained by the Company under the said Rules for the FY 2023-24 on a remuneration of ^5,00,000/-. Further, they have also been appointed by the Board to conduct the cost audit for the FY 2024-25 at a same remuneration of '5,00,000/- excluding out of pocket expenses incurred in connection excluding the out of pocket expenses & applicable taxes .

The Companies Act, 2013, mandates that the remuneration payable to the Cost Auditor is to be ratified by the shareholders. Accordingly, a resolution seeking the shareholders' ratification of the remuneration payable to the Cost Auditor for the FY 2024-25 is included in the Notice convening the 70^th Annual General Meeting.

Secretarial Audit

M/s. R Sridharan & Associates, Practising Company Secretaries, Chennai was appointed as the Secretarial Auditor to undertake

the Secretarial Audit of the Company for the FY 2023-24. The report of the Secretarial Auditor is annexed to and forms part of this Report as Annexure F. There are no qualifications, reservations, adverse remarks or disclaimers given by the Secretarial Auditor in the Report.

In terms of Regulation 24A of the Listing Regulations, there is no material unlisted subsidiary incorporated in India. Material unlisted subsidiary for the purpose of this Regulation is a subsidiary whose income/net worth exceeds 10 per cent of the consolidated income/net worth respectively of the Company and its subsidiaries in the immediately preceding accounting year. Hence, there is no requirement for a Secretarial audit to be conducted for any of the Company's subsidiaries in India.

Compliance Management

The compliance management system, KOMRISK tracks compliances across the various factories and offices of the Company. This tool has a comprehensive coverage of the various applicable laws including auto updation based on the regulatory changes from time to time.

Corporate Governance

In terms of Regulation 34(3) read with Schedule V of the Listing Regulations, a separate section on Corporate Governance including the certificate from a Practising Company Secretary confirming compliance is annexed to and forms an integral part of this Report.

CEO/CFO Certificate

Mr. Sridharan Rangarajan, Managing Director and Mr. P Padmanabhan, Chief Financial Officer have submitted a certificate to the Board on the integrity of the Financial Statements and other matters as required under Regulation 17(8) of the Listing Regulations.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134(3)(c) of the Companies Act, 2013, the Board to the best of its knowledge and belief and according to the information and explanations obtained by it confirms that:

• in the preparation of the annual accounts, for the financial year ended 31^st March 2024, applicable accounting standards have been followed and no material departures have been made from the same;

• the accounting policies mentioned in Note 3 of the Notes to the Financial Statements have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

• proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,

2013 for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities;

• the annual accounts have been prepared on a going concern basis;

• that internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and operating effectively;

• proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

ANNUAL RETURN

The Annual Return in Form MGT-7 is available at https://www.cumi-murueappa.com/annual-return/.

SECRETARIAL STANDARDS

The Company is in compliance with the Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2).

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

The information on Energy Conservation, Technology Absorption, Expenditure incurred on Research & Development and forex earnings/outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to and forms part of this Report as Annexure D.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company and its future operations.

PARTICULARS OF EMPLOYEES

The information on employees and other details required to be disclosed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to and forms part of this Report as Annexure A.

Under the Company's Employee Stock Option Scheme 2007 (ESOP Scheme 2007), no Option grants have been made since February 2012 and all Options granted under the Scheme have been vested and accordingly exercised or lapsed. The Employee Stock Option Plan 2016 (ESOP Plan 2016) was implemented

in February 2017 with the approval of the shareholders and currently governs the grant of options to employees. During the year, eligible employees were granted in aggregate 225,000 options under the ESOP Plan 2016. The disclosures with respect to options granted under the ESOP Scheme 2007 and ESOP Plan 2016 are contained in the Corporate Governance Report. Further, the disclosures relating to Stock Options as per Securities and Exchange Board of India (Share Based Employees Benefits) Regulations, 2014 as repealed at present and superseded by Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 read with the circular issued by SEBI on 16^th June 2015 have been provided on the Company's website and is available in the link https://www.cumi-murugappa.com/policies-disclosure/. Both ESOP Scheme 2007 and ESOP Plan 2016 are in compliance with the Securities and Exchange Board of India (Share Based Employees Benefits) Regulations, 2014 as repealed at present and superseded by Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

OTHER CONFIRMATIONS

No application under the Insolvency and Bankruptcy Code, 2016 (IBC) was made on the Company during the year. Further, no proceeding under the IBC was initiated or is pending as at 31^st March 2024. There was no instance of one time settlement with any Bank or Financial Institution.

The Company has complied with provisions relating to the constitution of the Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT

The Board gratefully acknowledges the co-operation received from various stakeholders of the Company viz., customers, investors, channel partners, advisors, suppliers, government authorities, banks and other business associates during the year. The Board also places on record its sincere appreciation of all the employees of the Company for their commitment and continued contribution to the Company.