Rane Brake Lining Ltd

Your Board of Directors hereby present to you the Nineteenth Annual Report covering the operational and financial performance together with the accounts for the year ended March 31,2024 and other prescribed particulars:

1. State of Company's affairs

The financial year 2023-24 saw a pick-up in the business at the backdrop of the robust growth of the Indian and global economy. The automotive and auto components industry faced supply chain challenges due to semiconductor shortage, shipping and logistics constraints.

The increase in production volumes across all major segments and entry into new models in Passenger Vehicle and Two wheeler segments have resulted in positive sales growth. Entry into new geographies and the enhancement of the product range, development of new grades will sustain the growth momentum in the export market. Efforts to increase the export customer base will be the prime focus in the future for business growth.

1.1. Financial Performance

The financial highlights of the year under review are as follows:

(' in Crores)

The Key Performance Indicators, operational performance and summary on balance sheet are furnished in page no.1 of this annual report and significant changes in key ratios are discussed in Management Discussion and Analysis Report and notes to the financial statements.

The Sales and other Operating Revenue for the FY 2023-24 increased by 9.21% while the Profit Before Tax (PBT) increased by 22.09% when compared to previous year. The Earnings Per Share (EPS) for the year 2023-24 was '52.11 as against '43.29 in the previous year.

The Company continues to be a subsidiary of Rane Holdings Limited (RHL / Holding Company). There were no material changes or commitments, affecting the financial position of the Company between the end of the financial year of the Company and date of this report, apart from those disclosed in the financial statements section of this Annual Report. There was no change in nature of business during the year.

1.2. Appropriation

The Board of Directors, taking into consideration, the operational performance and financial position of the Company, have recommended a dividend of 300% (i.e., '30/- per share of '10/- each, fully paid-up) for approval of shareholders at the ensuing 19^th Annual General Meeting (AGM) scheduled to be held on July 22, 2024. The total dividend paid / payable on equity shares for FY 2023-24 would be '23.19 crores.

On declaration of the dividend by the shareholders, it will be paid on July 31, 2024 to all the eligible shareholders, whose name appears in the register of members of the Company as on July 15, 2024, being the Record Date fixed for this purpose, subject to deduction of tax at source where applicable. The total of dividend paid / payable for the FY 2023-24 would be '30/- per equity share of a face value of '10/- each. This represents a payout ratio of 58%.

Considering the above, the Board has retained '23.20 Crores as surplus in the profit and loss account. A sum of '12.17 Crores has been approved by the Board for transfer to reserves.

The dividend pay-out is in accordance with the Company's Dividend Distribution Policy. The policy is available under the Corporate Governance section on the website of the Company at the web-link:

https://ranegroup.com/investors/rane-brake-lining-limited/.

1.3. Merger / Scheme of Amalgamation

The Board of Directors of the Company at its meeting held on February 09, 2024 has considered and approved Scheme of Amalgamation of Rane Engine Valve Limited and Rane Brake Lining Limited with and into Rane (Madras) Limited and their respective shareholders, in terms of the provisions of Section(s) 230 to 232 and other applicable sections and provisions of the Companies Act, 2013 ('Act') read together with the rules made thereunder ('Scheme').

The Scheme is subject to the approval of shareholders, creditors, Stock Exchanges viz. BSE Limited and National Stock Exchange of India Limited, National Company Law Tribunal and such other approvals as may be required. The merger significantly simplifies the group structure by consolidating listed group companies and aligns public shareholder's interest by converging the stake at a single listed entity. The Management Discussion and Analysis section of this Annual Report carries the rationale and benefits of the Scheme.

1.4. Credit Rating

The Company's financial management and its ability to service its financial obligations in a timely manner, has been re-affirmed by ICRA Limited for its credit facilities during the year under review on January 04, 2024. Further, Long-Term Rating and Short-Term Rating was kept under review as 'Rating Watch with Developing Implications' on February 20, 2024, the rating action follows the announcement of merger referred to in Para 1.3 of this report.

This has been disclosed to stock exchanges and made available in the Company's website. The Corporate Governance section of this Annual Report carries the details of credit rating.

1.5. Share Capital

During the year under review, there was no change in capital structure of the Company and as at the year ended March 31, 2024, the paid-up capital of the Company stood at '7,72,98,710/- consisting of 77,29,871 fully paid-up equity shares of '10/- each.

1.6. Management Discussion & Analysis

The business of your Company is manufacturing and marketing of auto components for transportation industry viz., friction material (Disc Pads, Brake Shoes, Clutch Facings, Clutch Buttons, Brake Linings and Brake Blocks). The analysis on the performance of the industry, the Company, internal control systems, risk management are presented in the Management Discussion and Analysis report forming part of this report and are provided in 'Annexure A'.

1.7. Subsidiaries, Associate and Joint Venture Companies

The Company does not have any subsidiary, associate or joint venture. There was no Company which has become or ceased to be Company's subsidiary, Joint venture or associate during the financial year 2023-24.

2. Board of Directors, Committees and Management

2.1. Composition

The composition of the Board of Directors and its Committees, viz., Audit Committee, Nomination and

Remuneration Committee, Stakeholders' Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee are constituted in accordance with Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('SEBI LODR'), wherever applicable. The Board of Directors have also constituted an Executive Committee and a Finance Committee. The Corporate Governance Report given in 'Annexure E' contains an overview of the role, terms of reference, meetings and composition of the Board of Directors of the Company and its Committees.

Mr. L Ganesh, retired as Chairman of the Board, effective from close of business hours on March 31,2024 and is continuing to serve on the Board, as a Non-Executive Director. The Board appointed Mr. Harish Lakshman as Chairman of the Board, effective from April 01,2024. Appointment of Mr. Ramesh Rajan Natarajan (DIN:01628318) as an Independent Director has been recommended by the Board of Directors on May 03, 2024, based on recommendations of the Nomination and Remuneration Committee. The approval of the shareholders of the Company is being sought at the ensuing Annual General Meeting for his appointment as an Independent Director in the first term of 5 (five) consecutive years with effect from July 22, 2024.

There were no other change in the composition of the Board of Directors during this year.

The Board of Directors are of the opinion that the Director(s) proposed for appointment / re-appointment at the ensuing 19^th AGM of the Company possess integrity, necessary expertise, relevant experience and proficiency and the Corporate Governance Report annexed to this report contains necessary disclosures regarding such Director(s).

The terms and conditions of appointment of Independent Directors have been disclosed under the Corporate Governance section on the website of the Company at the web-link: https://ranegroup.com/ investors/rane-brake-lining-limited/.

All the Directors have affirmed compliance with the Code of Conduct of the Company. The Independent Directors have further affirmed that they satisfy the criteria laid down under section 149(6) of the Act and Regulation 25 and other applicable regulations of SEBI LODR as amended from time to time. Further, in terms of Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, Independent Directors of the Company have confirmed that they have registered themselves with the databank maintained by the Indian Institute of Corporate Affairs (IICA) and have qualified the proficiency test, if applicable to them. The Board of Directors at its first meeting of the FY 2023-24 has taken on record the declarations and confirmations submitted by the Independent Directors. During the year, the Board had not appointed any person as an Alternate Director for an Independent Director on the Board. The Company has obtained a certificate from a Company Secretary in Practice that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as Directors of companies by the SEBI / Ministry of Corporate Affairs or any such statutory authority.

2.2. Retirement by rotation

Mr. Ganesh Lakshminarayan (DIN:00012583) retires by rotation at the ensuing 19^th AGM, being eligible, he offers himself for re-appointment. The proposal for re-appointment of Mr. L Ganesh as a Director is included in the notice convening the 19^th AGM.

2.3. Board and Committee Meetings

The schedule of meetings of the Board of Directors and Committees of the Board is circulated to the Directors in advance. During the year, six (6) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The gap between any two consecutive meetings of the Board of Directors was less than 120 days. The details of Committee meetings are provided in the Corporate Governance Report. For eligible matters, if any, the Board / its Committees may also accord approvals through resolutions passed by circulation.

2.4. Meeting of Independent Directors

A meeting of Independent Directors was held to assess the quality, quantity, timeliness of flow of information between the management and the Board and review the performance of the non-Independent Directors. The Independent Directors expressed that the current flow of information was timely and of superior quality which enabled them to effectively perform their duties and that they are satisfied with the performance of non-Independent Directors.

2.5. Board Evaluation

The annual evaluation of the performance of the Board, functioning of its committees, individual Directors, and the Chairman of the Board was carried out based on the criteria formulated by the Nomination and Remuneration Committee.

To all the directors, a structured questionnaire was sent seeking feedback and any comments on various parameters as recommended by the Nomination and Remuneration Committee. As regards evaluation of the functioning of the Board as a whole, including Committee(s) thereof, key focus areas for evaluation were on aspects like Board diversity and skill set to review strategies, risk management dimensions and processes, flow of information, adequacy and timeliness of agenda materials, effectiveness of presentations and more importantly the processes of reviewing strategic matters, annual operating plan, strategic business plan and guiding the management.

The performance of the Individual Directors, including Independent Directors were evaluated through peer evaluation. The performance of Chairman was also evaluated on countenances such as ensuring top- level policy framework, creating an open environment for exchange of views besides ensuring effective mechanism for implementing board action points.

In forming the evaluation criteria of Directors, attributes such as commitment, competency and sectoral knowledge, contributions to Board decisions and discussions and staying up to date on recent trends, being aware of macrolevel developments and networking skills were considered.

The feedback on outcomes including comments / suggestions, along with action plans, if any, on matters requiring attention of the board were discussed by the Chairman.

The evaluation framework includes mechanism to share evaluation feedback on individual Directors to the Nomination and Remuneration Committee, wherever required.

The performance review of Non-Independent Directors were carried out by the Independent Directors in their separate meeting held during the year.

2.6. Familiarisation program for Independent Directors The details of familiarisation program for Independent Directors have been disclosed in the policies under the Corporate Governance section on the website of the Company at the web-link: https://ranegroup.com/ investors/rane-brake-lining-limited/.

2.7. Key Managerial Personnel (KMP) & Senior Management Personnel (SMP)

During the year under review, there were no changes in the Key Managerial Personnel and Senior Management Personnel of the Company.

As at the year ended March 31,2024, Mr. R Balakrishnan, President & Manager, Mr. J Ananth, Senior Vice President - Finance & Chief Financial Officer (CFO) and Mr. Venkatraman, Secretary, hold the office of Key Managerial Personnel (KMP), respectively, within the meaning of Section 2(51) of the Companies Act, 2013. The Senior Management Personnel other than KMP were Mr. V Narayanan (Head - Marketing), Mr. K Babu Nizam (Head - Materials Management) and Mr. R Govardhanan (Head - Human Resources).

2.8. Remuneration policy

The policy contains criteria for determining positive qualifications, positive attributes, independence of a Director and also covers aspects of remuneration which is reasonable and sufficient to attract, retain and motivate Directors / high potential employees to run the Company successfully.

The policy on appointment and remuneration of Directors, KMP and SMP as laid down by the NRC of the Board has been disclosed in the policies under the Corporate Governance section on the website of the Company at the web-link: https://ranegroup.com/ investors/rane-brake-lining-limited/. There has been no change in this policy during the financial year 2023-24. In accordance with the said policy, approval was obtained from the shareholders in terms of Regulation 17(6)(ca) of the SEBI LODR at the 18^th AGM held on July 24, 2023, for payment of commission to Mr. L Ganesh, Chairman, for an amount exceeding 50% of total annual remuneration payable to other Non-Executive Director, for the FY 2023-24. The details of remuneration paid / payable to the Directors during the FY 2023-24 is furnished in the Corporate Governance report annexed to this report of the Board.

3. Audit and allied matters

3.1. Audit Committee

The composition, terms of reference and meetings of the Audit Committee are disclosed in the Corporate Governance section of the Annual Report. The Audit Committee of the Board acts in accordance with the terms of reference, which is in compliance with the provisions of Section 177 of the Act and Regulation 18 of SEBI LODR and other applicable provisions of SEBI LODR, as amended from time to time.

3.2. Statutory Auditor

M/s. B S R & Co., LLP, Chartered Accountants (BSR) (Firm Registration Number 101248W/W-100022), hold the office of Statutory Auditors of the Company, in terms of Section 139 of the Act read with applicable rules thereunder and as per the members' approval accorded at the 17^th Annual General Meeting, for a first term of five consecutive years i.e., from the conclusion of the 17^th AGM (2022) till conclusion of 22^nd AGM (2027).

The Statutory Auditor's report to the members for the year ended March 31, 2024 does not contain any qualification, reservation, adverse remark or disclaimer. Also there has been no instance of fraud reported by the statutory auditors for the period under review.

3.3. Cost Audit & Maintenance of cost records

The Company maintains cost records as prescribed by the Central Government under Section 148(1) of the act in respect of certain specified products manufactured by it. However, the requirement for appointment of Cost Auditor and Cost Audit under the Companies (Cost Records and Audit) Rules, 2014 is not applicable to the Company.

3.4. Secretarial Auditor

M/s. S Krishnamurthy & Co., a firm of Company Secretaries in practice, have been appointed by the Board of Directors as Secretarial Auditors for the FY 2023-24. The Secretarial Audit report pursuant to Section 204 of the Companies Act, 2013 is annexed in 'Annexure B' and was taken on record by the Board of Directors at its meeting held on May 03, 2024. The report does not contain any qualification, reservation, adverse remark or disclaimer.

3.5. Internal Auditor

M/s. Deloitte Touche Tohmatsu India LLP are the Internal Auditors appointed by the Board of Directors based on the recommendations of the Audit Committee.

Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, review of statutory and legal compliances with applicable statutes / laws and assessing the internal control strengths in all these areas including financial reporting. Internal Auditor findings are discussed with the process owners and suitable corrective actions are taken as per the directions of the Audit Committee on a regular basis to improve efficiency in operations. The Internal Auditor reports directly to the Audit Committee. The Committee, while reviewing their performance scope, functioning, periodicity and methodology for conducting the internal audit, has taken into consideration their confirmation to the effect that their infrastructure viz., internal audit structure, staffing and seniority of the officials proposed to be deployed etc., are adequate and commensurate to the scope, functioning, periodicity and methodology for conducting the internal audit.

4. Directors' responsibility statement

In terms of Section 134(3)(c) read with section 134(5) of the Companies Act, 2013, the Directors, to the best of their knowledge and belief based on the information and explanations obtained by them, confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed and there were no material departures;

b. they had selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent 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 the year under review;

c. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company, preventing and detecting fraud and other irregularities;

d. they had prepared the financial statements for the financial year on a 'going concern' basis;

e. t hey had laid down internal financial controls to be followed by the Company and such internal financial controls were adequate and were operating effectively; and

f. they had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

5. Related Party Transactions (RPT)

All RPT that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant RPT made by the Company with related parties which require approval of the shareholders / which have potential conflict with the interest of the Company at large.

All RPT are placed before the Audit Committee and the Board, wherever required, for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are entered into in the ordinary course of business and are repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed by the Audit Committee on a quarterly basis. All RPT are approved by the Independent Directors who are members of the Audit Committee.

The Company has put in place a proper system for identification and monitoring of such transactions. Save as disclosed in this report none of the Directors or Key Managerial Personnel have any pecuniary relationships or transactions with the Company. The policy on Related Party Transaction as approved by the Board has been disclosed in the Corporate Governance section on the investor's page at the web link: https://ranegroup.com/investors/rane-brake-lining-limited/.

None of the Directors or Key Managerial Personnel or Senior Management Personnel have any material financial and commercial transactions (except receipt of remuneration, as applicable), which may have potential conflict with interest of the Company at large.

6. Corporate Social Responsibility (CSR)

The Rane Group's vision on Corporate Social Responsibility (CSR) is: "To be a socially and environmentally responsible corporate citizen". The

CSR activities of Rane Group focus on four specific areas, viz., (a) Education; (b) Healthcare; (c) Community Development; and (d) Environment.

The CSR Committee of the Board is responsible for recommending CSR projects and activities to the Board in line with the CSR policy. The CSR Committee monitors and reviews the implementation of CSR activities periodically.

The CSR activities undertaken by the Company are in line with the CSR Policy and recommendations of the CSR Committee.

During the year, the Company has contributed a sum of '0.85 crores on various CSR activities as per the CSR policy and recommendations of the CSR Committee. The 'Annexure C' to this report contains the annual report on CSR activities of the Company for FY 202324. The CSR policy of the Company has been disclosed in the Corporate Governance section on the investor's page at the web-link: https://ranegroup.com/investors/ rane-brake-lining-limited/.

Further, in terms of the CSR Rules, the Chief Financial Officer has issued a certificate to the CSR Committee that the funds disbursed for CSR have been used, for the purpose and in the manner approved by the Board for FY 2023-24.

7. Energy conservation, technology absorption and foreign exchange earnings and outgo

The 'Annexure D' to this report contains the information on conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014.

8. Corporate Governance Report

Your Company is committed to maintaining the highest standards of corporate governance and effective compliance with the regulatory norms under the SEBI regulations and other laws and regulations applicable to the Company. The Corporate Governance Report and the certificate issued by the Statutory Auditors are available in 'Annexure E' to this report.

9. Particulars of Directors, Key Managerial Personnel and Employees

The details in terms of Section 197(12) read with Rule 5 of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 is available in 'Annexure F' to this report.

Pursuant to Section 136(1) of the Companies Act, 2013, the report of the Board of Directors is being sent to the shareholders of the Company excluding the statement prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The statement is available for inspection by the shareholders at the Registered Office of the Company during business hours.

10. Risk Management

The Risk Management Committee of the Board periodically reviews the risk management policy and its procedures.

The Company has in place a Risk Management Policy covering internal and external risks including information security, cyber security, Environmental, Social and Governance (ESG) related etc., measures for risk mitigation including systems and processes for internal control to identify risks associated with the Company and measures to mitigate such risks. The details of composition, scope and the meetings held during the year are provided as part of the Corporate Governance report are provided in 'Annexure E' to this report.

11. Other disclosures

a. Details of loan, guarantees and investments, if any, under the provisions of Section 186 of the Companies Act, 2013, are given in the notes to the financial statements.

b. The Internal control systems and adequacy are discussed in detail in the Management Discussion and Analysis annexed to the Directors Report.

c. There was no significant / material order passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

d. The policies approved and adopted by the Board have been made available under the Corporate Governance section of the website of the Company at the web-link: https://ranegroup.com/investors/rane-brake-lining-limited/.

e. The copy of the Annual Return is available under the Corporate Governance section on the website of the Company at the web-link: https://ranegroup.com/investors/rane-brake-lining-limited/.

f. The Company has complied with the applicable secretarial standards viz., SS-1 on meetings of Board of Directors and SS-2 on General Meetings issued by Institute of Company Secretaries of India as per section 118(10) of the Companies Act, 2013.

g. Business Responsibility and Sustainability Reporting is not applicable to the Company since it does not fall under the top 1000 listed companies based on market capitalisation.

h. The details regarding unclaimed / unpaid shares and dividend transferred / proposed to be transferred to the Investor Education and Protection Fund (IEPF) and other relevant details in this regard, have been provided in the corporate governance section of this annual report.

i. The Company does not accept any deposits falling under the provisions of section 73 of the Companies Act, 2013 and the rules framed thereunder.

j. The Company has established a formal vigil mechanism named 'Rane Whistle Blower Policy' for reporting improper or unethical practices or actions which are violative of the code of conduct of the Company. The policy which is also available on the intranet portal of the Company provides adequate safeguard against victimisation and for direct access to the Chairman of the Audit Committee for the employees to state their complaints / grievances.

k. The Company has always provided a congenial atmosphere for work that is free from discrimination and harassment and has provided equal opportunities of employment to all irrespective of their caste, religion, colour, marital status and gender. The Company believes that women should be able to do their work in a safe and respectful environment that encourages maximum productivity. The Company has a zero tolerance towards sexual harassment. The Company has adopted a policy on prevention of sexual harassment of women at work place and put in place proper dissemination mechanism across the Company. The Company has carried out awareness programmes / sessions on the mechanism established under this policy, across its various locations. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH) comprising of Presiding Officers and members with an appropriate mix of employees and external subject matter experts. During the period, the details of complaints received / resolved or pending are as under:

No. of complaints received during the year - Nil No. of complaints disposed off during the year - Nil

No. of complaints pending as at the end of the year - Nil

l. I n view of the exemptions available vide General circular 09/2023 dated September 25, 2023, issued by the Ministry of Corporate Affairs ("MCA”) read with previous circulars and SEBI Circular dated October 07, 2023, the company will not be dispatching hard copies of the Annual Report to the shareholders. The full Annual Report will be made available on the website of the Company and will also be disseminated to the stock exchanges where shares of the Company are listed. The hard copies of the Annual Report will be made available to those members who are specifically requesting for the same. The electronic copies of the annual report and the notice convening the 19^th AGM would be sent to all the members whose e-mail addresses were registered with the Company or their respective Depository Participants (DP).

Annual General Meeting

m. 19^th AGM would be conducted through video conferencing or other audio visual means on Monday, July 22, 2024 at 14:00 hrs (1ST) as per the framework notified by the Ministry of Corporate Affairs. The notice convening the 19^th AGM contains detailed instructions and notes in this regard. Acknowledgement

We thank our Customers, Investors, Suppliers, Vendors, Bankers, Government and Regulatory Authorities and other Business Associates for their continued support in successful performance of the Company. We place on record our appreciation for the committed services of all our employees.