RACL Geartech Ltd

To The Members,

The Directors are pleased to present to you the Forty First Annual Report on the business and operations of your Company along with the Audited Financial Statements for the financial year ended March 31, 2024.

FINANCIAL PERFORMANCE

Key highlights of standalone and consolidated financial performance for the year ended March 31, 2024 under review are summarized below:

(Rs. in Lakh)

STATE OF AFFAIRS AND OPERATIONAL HIGHLIGHTS

On a standalone basis, the Total income for FY 2023-24 was Rs. 42303.55 Lakhs, which was higher than the previous year's Total income of Rs. 36734.37 Lakhs by Rs. 5569.18 Lakhs. After accounting for taxes, the Company reported a Profit after tax for FY 2023-24 of 3,980.73 Lakhs in comparison with 3745.07 Lakhs for FY 2022-23. Consolidated Total Income for FY 2023-24 was Rs. 41,527.08 Lakhs, higher by 13.05% than the previous year's Total Income of Rs. 36,734.37 Lakhs. The Consolidated Profit After Tax for FY24 was Rs. 3,940.08 Lakhs, up from Rs. 3743.01 Lakhs in FY23, driven by improved performance across all businesses.

SHARE CAPITAL

Paid up Equity Share Capital as on March 31, 2024 stood at Rs. 10,78,16,000. During the year under review, the Company has not issued shares with differential voting rights, nor has granted any stock options nor sweat equity.

TRANSFER TO RESERVES

The Board of Directors has decided to retain the entire amount of profit for FY 2023-24 appearing in the Statement of profit and loss.

DEPOSITS

The Company has not accepted any deposits under Chapter V of the Companies Act, 2013 during the year.

DIVIDEND

The Board in its meeting held on May 27, 2024 recommended a dividend of Rs. 1.50 per fully paid up Equity Share on 1,07,81,600 Equity Shares of face value Rs. 10/- each, for the year ended March 31, 2024 based on the parameters laid down under the Dividend Distribution Policy.

The dividend on Equity Shares is subject to the approval of the Shareholders at the Annual General Meeting (AGM) scheduled to be held on Wednesday, September 11, 2024. The register of members and share transfer books will remain closed from September 5, 2024 to September 11, 2024 (both days inclusive) for the payment of final dividend to the shareholders of the Company, for the year ended on March 31, 2024. The Dividend will be paid to members within 30 days from the date of declaration of dividend whose name appears in the Register of Members as on September 4, 2024 and as per the Dividend Distribution Policy of the Company.

The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") is available on the Company's website at www.raclgeartech.com.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In compliance with the requirements of the Companies Act, 2013 ("Act") and Listing Regulations, the Company, as on date, has Seven (7) Directors on Board with an optimum mix of Executive, Non-Executive and Independent Directors.

Re-appointment of Directors liable to retire by rotation

In accordance with the requirements of the Act and the Company's Articles of Association, Ms. Narinder Paul Kaur (DIN: 02435942) retires by rotation and being eligible, offers herself for re appointment.

Retirement of Directors

During the year under review Mr. Dev Raj Arya (DIN:00057582), was superannuated as Whole Time Director of the Company w.e.f. close of business hours on October 21, 2023. The Board places on record its appreciation for the invaluable contribution and guidance provided by him to the Company over the years.

Changes in Key Managerial Personnel

As recommended by the Nomination & Remuneration Committee, the appointment of Ms. Neha Bahal as the Company Secretary and Compliance Officer of the Company was approved by the Board of Directors in their meeting held on May 22, 2023.

Mr. Dev Raj Arya, Whole Time Director and Chief Financial Officer of the Company resigned from the position of Chief Financial Officer with effect from the close of the business hours on October 21, 2023.

Based on the recommendation of Nomination and Remuneration Committee, the Board in its meeting held on November 07, 2023, approved the appointment of Mr. Jitender Jain as Chief Financial Officer of the Company.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

Four meetings of the Board were held during the year under review. For details of meetings of the Board, please refer to the Corporate Governance Report, which forms a part of the Annual Report. The maximum interval between any two meetings did not exceed 120 days as prescribed under the Companies Act, 2013.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company has the following committees which have been established as a part of the corporate governance practices and are in compliance with the requirements of the Companies Act, 2013 and the Listing Regulations.

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

• Risk Management Committee (constituted in the Board Meeting held on May 22, 2023)

• Dividend Distribution Committee (constituted in the Board Meeting held on May 22, 2023; dissolved in the Board Meeting held on August 12, 2023) The details with respect to the compositions, roles, number of meetings held during the year is detailed in the corporate governance report of the Company, which forms a part of this Report.

BOARD EVALUATION

The annual evaluation process of the Board of Directors, individual Directors and Committees was conducted in accordance with the provisions of the Act and the Listing Regulations. The Board evaluated its performance after seeking inputs from all the Directors based on criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the Committees was evaluated by the Board after seeking inputs from the committee members based on criteria such as the composition of committees, effectiveness of committee meetings, etc. The above criteria's are broadly based on the Guidance note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017. In a separate meeting of IDs, performance of Non-Independent Directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of the Executive Director and NEDs. The NRC reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. and the Board as a whole. In the Board meeting that followed the meeting of the IDs and meeting of the NRC, the performance of the Board, its committees and individual Directors was also discussed. The evaluation process endorsed the Board's confidence in the ethics standards of the Company, cohesiveness amongst the Board members, flexibility of the Board and management in navigating the various challenges faced from time to time and openness of the management in sharing strategic information with the Board.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

The Company has one subsidiary namely RACL Geartech GmbH which was incorporated in Austria in February, 2019. The consolidated financial statements presented by the Company include the financial information of RACL Geartech GmbH and have been prepared in compliance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India ("ICAI").

The Company has no Joint Venture or Associate Company. There has been no material change in the nature of the business of its subsidiary.

Pursuant to provisions of Section 129(3) of the Act, a separate statement containing the salient features of the financial statements of the Company's subsidiary in Form AOC-1 is attached with the financial statements of the Company.

Further, pursuant to the provisions of Section 136 of the Act, the standalone financial statements of the Company, consolidated financial statements along with relevant documents and separate accounts in respect of RACL Geartech GmbH, are available on the website of the Company.

AUDITORS & AUDITORS' REPORT A. STATUTORY AUDITORS

At the 37th AGM held on September 21, 2020, the Members approved the re-appointment of M/s. Gianender & Associates (ICAI Firm Registration Number: 004661N), as the Statutory Auditors of the Company for a second term of 5 years commencing from the conclusion of 37th AGM till the conclusion of the 42nd AGM to be held in the year 2025.

The standalone and consolidated financial statements of the Company have been prepared in accordance with Ind AS notified under Section 133 of the Act. The Statutory Auditor's report does not contain any qualifications, reservations, adverse remarks or disclaimers. The Statutory Auditors of the Company have not reported any fraud to the Audit Committee of Directors as specified under Section 143(12) of the Act, during the year under review.

B. SECRETARIAL AUDITOR

M/s. Rosy Jaiswal & Co., Company Secretaries (Peer Review Number: 2298/2022), were appointed as Secretarial Auditors of your Company to conduct a Secretarial Audit of records and documents of the Company for FY24. The Secretarial Audit Report confirms that the Company has complied with the provisions of the Act, Rules, Regulations and Guidelines and that there were no deviations or non-compliances. The Secretarial Audit Report is provided in Annexure - A to this Report.

C. INTERNAL AUDITOR

Pursuant to provisions of Section 138 of the Act, the Board of Directors at its Meeting held on May 27, 2024 appointed Protiviti India Member Private Limited as Internal Auditors of the Company for the financial year 2024-25. The Internal Auditors of the Company provided their reports to the Audit Committee and Board of Directors periodically.

On recommendation of the Audit Committee, the Board of Directors approved the re-appointment of M/s Protiviti India Member Private Limited as Internal Auditors of the Company for the Financial Year 2024-25.

COST AUDIT AND MAINTENANCE OF COST RECORDS

Pursuant to Companies (Cost Records and Audit) Amendment Rules, 2014 notified by the Ministry of Corporate Affairs (MCA) on December 31, 2014, the Company is not mandatorily required to get its Cost Records for the financial year 2023-24 audited in terms of provisions of Section 148 of the Act and maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Act, was also not required to be maintained by the Company.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes affecting the financial position of the Company subsequent to the close of FY 2023-24 till the date of this report.

PROCEEDINGS UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

There was no application made or proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year under review.

DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF

During the year under review, there were no instances of onetime settlement with any Banks or Financial Institutions.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has devised systems, policies, and procedures/ frameworks which are currently operational within the Company for ensuring the orderly and efficient conduct of its business, which includes adherence to policies, safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. In line with the best practices, the Audit & Risk Management Committee and the Board reviews these internal control systems to ensure they remain effective and are achieving their intended purpose. Where weaknesses, if any, are identified as a result of the reviews, new procedures are put in place to strengthen controls. These controls are in turn reviewed at regular intervals. The systems/frameworks include proper delegation of authority, operating philosophies, policies and procedures, effective IT systems aligned to business requirements, an internal audit framework an ethics framework, a risk management framework, and adequate segregation of duties to ensure an acceptable level of risk. The Code covers transparency in financial reports, ethical conduct, compliant to regulations, disagreement of interest review, and reporting of matters. All audit cognitions and subsequent steps thereon are trailed for determination by the Internal Audit part and reported to the Audit Committee.

VIGIL MECHANISM

Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behaviour. In line with the Company's Code of Conduct, any actual or potential violation, howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of the employees in pointing out such violations of the Company's Code of Conduct cannot be undermined.

Pursuant to Section 177(9) of the Act, a vigil mechanism was established for directors and employees to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the Company's code of conduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chairman of the Audit Committee of Directors of the Company for redressal. No person has been denied access to the Chairman of the Audit Committee of Directors. Whistle Blower Policy of the Company can be accessed at given weblink: www.raclgeartech.com.

RISK MANAGEMENT

The Board has formed a Risk Management Committee for overseeing the Company's risk management processes and systems and implementation of the risk management policy. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee of Directors has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 34(2)(e) of Listing Regulations, Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE

Pursuant to Regulation 34 read with Schedule V of the Listing Regulations, a separate section on the Corporate Governance Report, forms an integral part of the Annual Report. A certificate from Ms. Rosy Jaiswal, Practicing Company Secretary confirming compliance with corporate governance norms, as stipulated under the Listing Regulations, is annexed to the Corporate Governance Report.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

In accordance with Regulation 34(2)(f) of the Listing Regulations, BRSR, covering disclosures on the Company's performance on Environment, Social and Governance parameters for FY24 in the prescribed format, is part of this Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

During the year under review, no significant or material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and Company's operations.

ANNUAL RETURN

As provided under Section 92(3) and 134(3)(a) of the Act, the Annual Return in the prescribed format is available on the website of the Company at www.raclgeartech.com.

SECRETARIAL STANDARDS

Your Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of section 186 of the Act are given in the Notes to the Financial Statements.

RELATED PARTY CONTRACTS & ARRANGEMENTS

In line with the requirements of the Act and the Listing Regulations, the Company has formulated a Policy on Related Party Transactions and the same has been placed on company's website; www.raclgeartech.com. During the year under review, all transactions entered into with related parties were approved by the Audit Committee of Directors. Certain transactions, which were repetitive in nature, were approved through omnibus route. As per the Listing Regulations, any related party transaction exceeding Rs 1,000 crore or 10% of the annual consolidated turnover, as per the last audited financial statement whichever is lower, is considered as material and requires Members approval. Accordingly, the Company sought and obtained necessary Members approval for the year under review. However, there were no material transactions with any related parties as per the Act. Disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is annexed to this report as Annexure- B.

CORPORATE SOCIAL RESPONSIBILITY

The Company is committed to ensure the well-being of the community and environment in which it operates.

Corporate Social Responsibility (‘CSR') forms an integral part of our business activities. The Company's CSR Policy also reflects the Company's commitment towards society and environment. The CSR initiatives are carried out by the Company through a variety of effective programs in accordance with the requirements of Section 135 and Schedule VII of the Companies Act, 2013, and rules made thereunder (‘the Act'). The Corporate Social Responsibility Committee and the Board of Directors closely review and monitor, from time to time, the various CSR activities undertaken by the Company. A detailed description of the programs/ activities is contained in the Annual CSR Report which forms an integral part of this Report and is annexed as Annexure - C. The contents of the CSR Policy as well as the CSR programs undertaken by the Company are available on the Company's website at www.raclgeartech.com.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

A. Conservation of Energy: The Company has a longstanding history of efficient management of all its assets and resources. The Company's conscious efforts are aligned with the ethos of keeping communities and environment at the heart of doing business. Green power is sourced on the basis of long-term power purchase agreements to ensure stability of prices and supplies, with the generation source being that of solar. In this rapidly transforming world, our sustainability goals will certainly evolve as our industry grows and as per the needs arising in the society.

B. Technology Absorption: The Company continues to adopt and use the latest technologies to improve the efficiency and effectiveness of its business operations.

C. Foreign Exchange Earnings and Outgo:

Further, details with respect to conservation of energy, technology absorption and foreign exchange earnings/ outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 is attached as Annexure - D to this Report.

HUMAN RESOURCE

At RACL Geartech Limited, we believe that our employees are our most important asset. Our commitment to foster a positive, harmonious and productive environment has been unwavering throughout the last year. We have continued to strengthen and elevate the positivity and consistency of our value based behavior through enhanced communication, engagement, inclusion and overall well being. We have successfully maintained a harmonious relationship with our workforce. We have maintained an open & transparent communication policy, that encourages employees across all levels to share their ideas, concerns, and feedback to improve our sites. At RACL, we do recognize the importance of continuous learning, we continue to leverage our training program on anti bribery, human rights, Prevention of Sexual Harassment (‘POSH'), Safety, Quality and other operating fundamentals.

INDUSTRIAL RELATIONS

During the year under review, industrial relations remained harmonious at all our offices and establishments. We maintained a pleasant and cordial working environment across all manufacturing locations and witnessed a high in productivity at most of our manufacturing locations. The total number of permanent employees at RACL including plants stands at approx. 670 at the close of business hours on March 31, 2024.

PARTICULARS OF EMPLOYEES

Information as per Section 197 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure - E to this Report. The statement containing the names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the aforementioned Rules forms integral part of this Report.

REMUNERATION POLICY

The Nomination & Remuneration Policy adopted by the Board on the recommendation of NRC enumerates the criteria for assessment and appointment/re-appointment of Directors, KMP and SMP on the basis of their qualifications, knowledge, skill, industrial orientation, independence, professional and functional expertise among other parameters with no bias on the grounds of ethnicity, nationality, gender or race or any other such discriminatory factor. Policy enables the Company to retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage. The current policy is available on Company's website at www.raclgeartech.com. Company ensures compliance with the Policy in true letter and spirit.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company has zero tolerance for sexual harassment at the workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the workplace, to provide protection to employees at the workplace and for the prevention and redressal of complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. To uphold this commitment, we have established an Internal Complaints Committee (ICC) dedicated to the thorough investigation and resolution of sexual harassment allegations. We strongly encourage employees to voice their concerns and report any incidents of harassment to the ICC without hesitation.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 have been provided in the Report on Corporate Governance.

HEALTH, SAFETY AND ENVIRONMENT

RACL Geartech Limited gives importance to safety, health and well-being of its employees and all the people working for the Company. The absolute respect of Environment, Health and Safety (EHS) is on the top priority of RACL Geartech Limited. The Company is working hard to reduce the number of accidents to Zero. The Company encourages and ensures that not only its employees but also its subcontractors working on Company's plants as well as its suppliers comply with the occupational, health and safety measures.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, your Company's Directors, based on the representations received from the Management, confirm that:

a. in the preparation of the Annual Accounts for the Financial Year ended March 31, 2024, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2024 and of the profit and loss of the Company for that period;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a going concern basis.

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

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

ACKNOWLEDGEMENTS

On behalf of the Directors of the Company, I would like to place on record our deep appreciation to our shareholders, customers, business partners, vendors, bankers, and financial institutions for all the support rendered during the year. The Directors thank the Government of India, Governments of various States in India, Governments of various Countries, and concerned Government Departments for their cooperation.

The Directors appreciate and value the contribution made by all our employees and their families and the contribution made by every other member of the RACL family.