Happy Forgings Ltd

Dear Shareholders,

Your Board of Directors take pleasure in presenting the 46th Annual Report of Happy Forgings Limited ("The Company") on the business and operations of the Company, together with the Audited Financial Statements, prepared in compliance with Ind AS Accounting Standards, for the year ended 31st March, 2025.

FINANCIAL SUMMARY & PERFORMANCE HIGHLIGHTS

The Audited Financial Statements for the Financial Year ended 31st March, 2025, forming part of this Annual Report, have been prepared in accordance with the Indian Accounting Standard (hereinafter referred to as "Ind AS") prescribed under Section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent applicable. Necessary disclosures with regard to Ind-AS reporting have been made under the Notes to Financial Statements. The Company's performance during the financial year under review as compared to the previous financial year is summarised below:

Note:

1. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.

Standalone:

During the year under review, the revenue from operations and other income stood at ' 1,44,646.28 Lakhs as compared to the last year's revenue of ' 1,37,159.12 Lakhs. The Company has achieved Profit Before Tax of ' 35,967.41 Lakhs and Profit After Tax of ' 26,757.46 Lakhs as on 31st March, 2025 as against previous year's Profit Before Tax of ' 32,439.23 Lakhs and Profit After Tax of ' 24,298.67 Lakhs.

The Company achieved a total Comprehensive Income of ' 26,907.86 Lakhs as against previous year's Comprehensive Income of ' 24,913.11 Lakhs. The EPS on financials for the year ended on 31st March, 2025 was ' 28.40 (Basic) and ' 28.39 (Diluted).

Consolidated:

During the year under review, the revenue from operations and other income stood at ' 1,44,634.48 Lakhs as compared to the last year's revenue of ' 1,37,159.07 Lakhs. The Company has achieved Profit Before Tax of ' 35,955.34 Lakhs and Profit After Tax of ' 26,743.63 Lakhs as on 31st March, 2025 as against previous year's Profit Before Tax of ' 32,438.83 Lakhs and Profit After Tax of ' 24,298.37 Lakhs. The Company achieved a total Comprehensive Income of ' 26,894.03 Lakhs as against previous year's Comprehensive Income of ' 24,912.81 Lakhs. The EPS on financials for the year ended on 31st March, 2025 was ' 28.39 (Basic) and ' 28.37 (Diluted).

More details on the financial statements of the Company along with various financial ratios are available in the Management Discussion & Analysis Report forming part of this report.

dividend & appropriations

The Board of Directors of your company has decided to recommend final Dividend of ' 3 per share of Face value of Rs 2/- each fully paid for the financial year ended 31st March, 2025 subject to the approval of shareholders in the ensuing Annual General Meeting.

As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations'), the Company has formulated Dividend Distribution Policy taking into account the parameters prescribed in the said Regulations. The Dividend Distribution Policy is available on Company's website at

https://happyforainasltd.com/wp-content/uploads/2025/02/

Dividend-Distribution-Policy.pdf

There is no dividend which was required to be transferred to Investor Education and Protection Fund during the year ended 31st March, 2025.

transfer to reserves

The Directors do not propose to transfer any amounts to the general reserves of the Company, instead have recommended to retain the entire profits for the financial year ended 31st March, 2025 in the profit and loss account. There is no dividend which was required to be transferred to Investor Education and Protection Fund during the year ended 31st March, 2025.

a) Authorised Share Capital

During the year under review, there was no change in the Authorised Share Capital of the Company.

As on March 31, 2025, the Authorised Share Capital of the Company is 15,00,00,000 Equity Shares of Rs 2/- each amounting to ' 30,00,00,000 (Rupees Thirty crores only).

b) Issued, Subscribed and Paid-up Share Capital

During the year under review, the paid-up capital has increased from 9,42,04,882 shares of FV Rs 2/- each to 9,42,42,200 shares of FV of ' 2 each pursuant to the allotment of two lots of ESOPs during the year.

After the first ESOP allotment of 19,943 equity shares of ' 2 each on 31st December, 2024, the paid-up capital increased from 9,42,04,882 of FV ' 2 each amounting to ' 18,84,09,764 to 9,42,24,825 of FV ' 2 each amounting to ' 18,84,49,650.

After the second ESOP allotment of 17,375 equity shares of ' 2 each on 12th February, 2025, the paid-up capital increased from 9,42,24,825 of FV ' 2 each amounting to ' 18,84,49,650 to 9,42,42,200 of FV ' 2 each amounting to ' 18,84,84,400.

As on March 31, 2025, the Issued, Subscribed and Paid- up Share Capital of the Company is 9,42,42,200 Equity Shares of FV Rs 2/- each amounting to ' 18,84,84,400 (Rupees Eighteen crores eighty-four Lakhs eighty-four thousand four hundred only).

c) Utilisation of Proceeds of IPO

Pursuant to the Regulation 32 of the Listing Regulations, there was no deviation(s) or variation(s) in the use of proceeds of IPO till 31st March, 2025.

The proceeds of IPO were utilised for the objects as disclosed in the Prospectus. Details as on 31st March, 2025 are as follows:

The Company has appointed ICRA as a monitoring agency to monitor the utilisation of the funds. The report issued by ICRA states that there is no deviation in the utilisation of the funds.

There was no deviation / variation in the utilisation of the funds as certified by Mr. Pankaj Kumar Goyal, Chief Financial Officer of the Company. Necessary disclosures have been made to the Stock Exchanges in the Statement of Deviation/Variation Report issued quarterly along with the Financial Statements.

associates/consolidated financial statements

The Company has a wholly owned subsidiary i.e. M/s HFL Technologies Private Limited.

The consolidated financials of the Company and its subsidiary have been prepared in the same form and manner as mandated by Companies Act 2013 and shall be laid before the forthcoming Annual General Meeting of the Company. Statement containing salient features of the financial statements of subsidiaries, associates and joint ventures in form AOC-1 is annexed as annexure 1.

Further, there is no other company which has ceased to become a Subsidiary/Joint Venture/Associate Company during the year under review.

directors & key managerial personnel directors

The Company's Board of Directors is duly constituted in accordance with the provisions of the Companies Act, 2013 and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR"). As on the date of this report, the Board comprises of a balanced mix of Executive, Non-Executive and Independent Directors including Women Director. The Directors hold extensive experiences and specialised knowledge in sectors covering law, finance, accountancy and other relevant areas.

As on 31st March, 2025, the Board consists of 7 (Seven) directors comprising of four Non-Executive Independent Directors and three Executive Directors including two women directors, namely, Ms. Rajeswari Karthigeyan and Ms. Megha Garg. The Chairman of the Company is an Executive Director. The profile of all the Directors is available in the Annual Report of the Company.

None of the Directors of the Company are disqualified from being appointed as Directors in terms of Section 164(1) and (2) of the Companies Act, 2013 and are not debarred from holding the office of Director by virtue of any SEBI order or any other such authority. Your Company has also obtained a certificate from a Company Secretary in practice confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by Securities Exchange Board of India ("SEBI")/Ministry of Corporate Affairs ("MCA") or any such statutory authority. The afore mentioned certificate forms part of this Annual Report annexed with Corporate Governance Report. In the view of the Board, all the Directors possess the requisite skills, expertise, integrity, competence, as well as experience considered to be vital for business growth.

The composition of Board of Directors and detailed analysis of various skills, qualifications and attributes as required and available with the Board has been presented in the Corporate Governance Report.

The composition of the Board and its functioning reflect the Company's commitment to sound corporate governance principles.

Directors retiring by rotation

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Ms. Megha Garg (DIN: 07352042), Whole-time director of the Company is liable to retire by rotation at the ensuing 46th AGM of the Company.

She being eligible has offered herself for reappointment as Director of the Company. Resolution for her reappointment is being proposed at the 46th AGM and her profile is included in the Annexure to Notice of the 46th AGM.

Change in Board of Directors

During the financial year under review, the following changes occurred in the Board of Directors.

a. Mr. Prakash Bagla (DIN: 03043874), Nominee director resigned from the directorship of Company with effect from close of business hours on 24th May, 2024.

b. The term of Mr. Narinder Singh Juneja, DIN: 00393525, CEO and Whole-time Director of the Company was completed with effect from close of business hours on 31st December, 2024.

c. The second term of Mr. Vikas Giya, DIN:01399764, Independent Director of the Company was completed with effect from close of business hours on 30th January 2025.

key managerial personnel

As on 31st March, 2025, the following persons are Key Managerial Personnel ("KMP") of the Company pursuant to the provisions of Sections 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

DECLARATION BY INDEPENDENT DIRECTORS

There were four Independent Directors on the Board of the Company as on 31st March, 2025. The Company received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149 (6) of the Act and Regulation 16(1)(b) & 25 of SEBI LODR Regulations.

The Independent Directors have also submitted a declaration confirming that they have registered their names in the databank of Independent Directors as being maintained by the Indian Institute of Corporate Affairs (IICA) in terms of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act along with the Code of Conduct for Directors and Senior Management Personnel formulated by the Company as per Listing Regulations. The directors further confirmed that they have complied with the Code of Conduct as per SEBI (Prohibition of Insider Trading) Regulations.

The Company has obtained declaration from all the Independent Directors of the Company undertaking that they do not have any pecuniary relationship or transactions with the Company.

company's policy on appointment and remuneration of directors, key managerial personnel, senior management personnel and other employees

The Company has in place a 'Policy on Nomination & Remuneration for Directors, Key Managerial Personnel (KMP) and Senior Management', which, inter-alia, lays down the criteria for identifying the persons who are qualified to be appointed as Directors and/or Senior Management Personnel of the Company, along with the criteria for determination of remuneration of Directors, KMPs, Senior Management and their evaluation and includes other matters, as prescribed under the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI LODR Regulations. The Remuneration paid to the Directors is in line with the Remuneration Policy of the Company.

The Nomination and Remuneration policy is available on the website of the Company at https://happyforgingsltd. com/wp-content/uploads/2023/09/Nomination-and- Remuneration-Policy.pdf

NUMBER OF MEETINGS OF THE BOARD

Your Board meets at regular intervals to discuss and decide on business strategies/policies and review the Company's financial performance. During the Financial Year 202425, 6 Board Meetings were held. The meetings were held in accordance with the applicable provisions of the Act. The details relating to Board Meetings and attendance of Directors in each Board Meeting held during 2024-25 has been separately provided in the Corporate Governance Report. The interval between any two Board Meetings was well within the maximum allowed gap of 120 days. During the year, some of the business were considered by the Board by passing resolutions by circulation.

COMMITTEES OF THE BOARD

The constitution of the Board Committees is in acquiescence of provisions of the Act and the relevant rules made thereunder and Listing Regulations of the Company. The Board has constituted Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee, Risk Management Committee to deal with specific areas/ activities that need a closer review and to have an appropriate structure for discharging its responsibilities.

The composition, terms of reference, attendance of directors at the meetings of all the above Committees has been disclosed in the Corporate Governance Report.

There has been no instance where the Board has not accepted any of the recommendations of the Audit Committee.

BOARD EVALUATION

The Nomination and Remuneration Committee of the Company had approved a Nomination and Remuneration policy containing the criteria for performance evaluation, which was approved and adopted by the Board of Directors.

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the performance of its committees, and that of the individual Directors.

The evaluation process was conducted through a structured questionnaire covering various aspects such as the composition and structure of the Board and its Committees, effectiveness of Board processes, information flow, functioning, decision-making, and the performance of individual Directors, including Independent Directors and the Chairperson.

The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated. The Nomination and Remuneration Committee also reviewed the performance of the Board, its committees, and individual Directors. The feedback from the evaluation was discussed at the Board meeting and noted for further improvement and action, wherever required.

The Board's assessment was discussed with the full Board evaluating, amongst other things, the full and common understanding of the roles and responsibilities of the Board, contribution towards development of the strategy and ensuring robust and effective risk management, understanding of the operational programs being managed by the Company, receipt of regular inputs, receipt of reports by the Board on financial matters, budgets and operations services, timely receipt of information with supporting papers, regular monitoring and evaluation of progress towards strategic goals and operational performance, number of Board meetings, committee structures and functioning, etc.

The outcome of the evaluations conducted by the Nomination and Remuneration Committee and the Independent Directors at their respective meetings was presented to the Board, for assessment and development of plans/suggestive measures for addressing action points that arise from the outcome of the evaluation. The Directors expressed their satisfaction on the parameters of evaluation, the implementation and compliance of the evaluation exercise done and the results/outcome of the evaluation process.

meeting of independent directors

During the Financial Year under review, a separate Meeting of the Independent Directors was held on 26th March, 2025 without the attendance of Non-Independent Directors and the Management of the Company. The Independent Directors discussed and reviewed the performance of the Non-Independent Directors and the Board as a whole, and assessed the quality, quantity and timeliness of flow of information between the Management and the Board which is necessary for the Board to effectively and reasonably perform its duties.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Act, the Directors of the Company, based on representation from the management and after due enquiry, confirm that:

(i) i n the preparation of the Annual Accounts for the year ended 31st March, 2025, the applicable accounting standards have been followed and there are no material departures from the same.

(ii) 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 state of affairs of the Company as of 31st March, 2025 and of the profit of the Company for the year ended on that day.

(iii) they have 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 and for preventing and detecting frauds and other irregularities.

(iv) the Annual Accounts for the year ended 31st March, 2025 have been prepared on a "going concern" basis.

(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively throughout the financial year ended 31 st March, 2025.

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively throughout the financial year ended 31 st March, 2025.

risk management

The Company has in place a robust Risk Management framework to identify, evaluate, and manage various risks associated with its business operations. This framework is designed to ensure appropriate risk management practices across all levels of the organisation, thereby safeguarding the Company's assets, reputation, and stakeholders' interests.

In accordance with the provisions of Section 134(3)(n) of the Companies Act, 2013 and Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has constituted a Risk Management Committee comprising members of the Board and senior executives. The Committee periodically reviews the risk exposure and the measures taken to mitigate key risks.

Key risks identified include operational risks, Governance and regulatory risks, financial risks, cyber risks, Environment risks, Sector/Industry risks, Social risks The Company continuously monitors these risks through appropriate control measures and timely corrective actions.

The Company has also formulated and implemented a Risk Management Policy which is approved by the Board of Directors to identify and monitor business risk and assist in measures to control and mitigate such risks. The Policy is reviewed regularly and updated as necessary to align with the changing business environment and regulatory landscape The Policy is available on the Website of the Company at

https://happvforainasltd.com/wp-content/uploads/2025/02/

Risk-Management-policy.pdf

The other details in this regard are provided in the Corporate Governance Report, which forms part of this Annual Report.

internal financial controls

The internal financial controls include well-documented policies and procedures, clearly defined roles and responsibilities, standard operating procedures, risk control matrices, and robust IT systems. These are tested periodically for design and operating effectiveness through internal audits conducted by a reputed firm of internal auditors.

The Company has established and maintained adequate internal financial controls with reference to the financial statements, commensurate with the size, scale, and complexity of its operations. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with applicable laws.

The Audit Committee actively oversees and reviews the adequacy and effectiveness of the internal control systems and suggests improvements as needed.

The Company's internal control systems are routinely tested and certified by Statutory as well as Internal Auditors. Further there were no letters of internal control weaknesses issued by the Internal Auditor or the Statutory Auditors during the financial year under review.

The Company believes that strengthening of internal controls is an ongoing process and there will be continuous efforts to keep pace with changing business needs and environment.

Necessary certification by the Statutory Auditors in relation to Internal Financial Control u/s 143(3)(i) of the Act forms part of the Audit Report.

CORPORATE SOCIAL RESPONSIBILITY

In accordance with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a Corporate Social Responsibility Committee. The composition, role, and responsibilities of the Committee are in line with the statutory requirements.

The Company has adopted a CSR Policy, which outlines the guiding principles and activities to be undertaken in line with Schedule VII of the Act. The policy is available on the Company's website at

https://happvforainasltd.com/wp-content/uploads/2023/09/

CSR-Polioy-revised-Happy-Forgings-limited.pdf.

During the financial year under review, the Company has spent ' 480.26 Lakhs towards CSR initiatives in the local communities where it operates through projects focused on education, healthcare, environment sustainability, skill development etc. Apart from that, the Company has utilised ' 124.03 Lakhs from unspent CSR account for 2023-24 on the long-term project of construction of Vocational college under Bal Vikas Trust, Ludhiana which was started in FY 2023- 24.

The CSR activities were implemented either directly or through approved implementing agencies.

A detailed report on CSR activities in the prescribed format, as required under Rule 8 of the Companies (CSR Policy) Rules, 2014, is annexed to this Report as Annexure 2.

The Company remains committed to contributing positively to society and creating long-term social value through its CSR initiatives.

The Company firmly believes that businesses are responsible not only for generating financial returns but also for contributing to the betterment of society. It is committed to making a meaningful impact in the areas of education, healthcare, environment & community development and remains committed to fulfilling its social obligations with integrity and purpose.

The brief outline of the CSR Policy of the Company and the initiatives undertaken by the Company during the financial year ended 31st March, 2025, in accordance with Section 135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out in "Annexure- 2 " to this report.

particulars of contracts or arrangements with related parties

During the year under review, all the transactions entered by the Company with related parties were in compliance with the applicable provisions of the Act and the Listing Regulations, details of which are annexed to this report as "Annexure-3". All related party transactions are entered into only after receiving prior approval of the Audit Committee. Further, in terms of the provisions of Section 188(1) of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, all contracts'/arrangements/ transactions entered by the Company with its related parties, during the financial year under review, were in ordinary course of business and on arm's length and not material as per the Related Party Transaction policy.

In line with the requirements of the Act and the Listing Regulations, the Company has also formulated a Policy on dealing with Related Party Transactions ('RPTs') and the same is available on the website of the Company at

https://happyforqinqsltd.com/wp-content/uploads/2025/04/

Policv-on-Related-Partv-Transactions-1.pdf

Further, the Company has not entered any contracts/ arrangements/transactions with related parties which are material in nature in accordance with the Related Party Transactions Policy of the Company nor any transaction has any potential conflict with the interest of the Company at large.

particulars of loans, guarantees or investments

The details of loans, guarantees and investments covered under the provisions of Section 186 of the Act and Regulation 34 read with Schedule V of the SEBI Listing Regulations form part of the Notes to the financial statements of the Company provided in this Annual report.

particulars of employees

The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time in respect of Directors/ employees of the Company and a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to- time forms part of this Board Report as "Annexure- 4" to this report.

and foreign exchange earnings and outgo

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 for year ended 31st March, 2025 is attached as "Annexure -5"

Statutory AudiToRS And AudiToR's Report

As per Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company approved the appointment of M/s S R Batliboi & Co LLP, Chartered Accountants (Firm's Registration No. 301003E/E300005) as the Statutory Auditors of the Company for a period of 5 (five) consecutive years to hold office with effect from FY 2020-21 until the conclusion of the 46th AGM of the Company to be held in the calendar year 2025. The Company has received certificate from the said auditors that they are not disqualified and are eligible to hold the office as Auditors of the Company.

The Statutory Auditors have not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Reports on the Financial Statements both standalone and consolidated for the Financial Year 2024-25 and the Reports are self-explanatory. The said Auditors' Reports for the Financial Year ended March 31, 2025, on the Financial Statements of the Company forms part of this Annual Report.

Re-appointment of SR Batliboi & CO. LLP

The Audit Committee and the Board of Directors in their respective meetings held on May 17, 2025 have approved and recommended the re-appointment of M/s. S R Batliboi & Co., LLP, Chartered Accountants, as Statutory Auditors of the Company to hold office for a period of 5 (Five) consecutive financial years, from the conclusion of the 46th Annual General Meeting to be held in the year 2025 until the conclusion of the 51st Annual General Meeting to be held in the year 2030 subject to the approval of the shareholders at the 46th Annual General Meeting.

Internal Auditors

The Company has in place an adequate internal audit framework to monitor the efficacy of the internal controls with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the Company's processes. The Internal Auditor reports directly to the Chairman of the Audit Committee.

M/s. S C V & Co, LLP were appointed as the Internal Auditors of the Company in accordance with the provisions of Section 138 of the Act read with the Companies (Accounts) Rules, 2014 for 2024-25.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board at its meeting held on 24th May, 2024, had appointed M/s Chandrasekaran Associates, Practicing Company Secretaries as Secretarial Auditor of the Company for the financial year 2024-25. The Secretarial Audit Report for 2024-25 in form MR 3 is annexed to this report as "Annexure- 6".

Pursuant to provisions of Regulation 24A of Listing Regulations, the Company has undertaken an audit for the 2024-25 for all applicable compliances as per SEBI Rules, Regulations, Circulars, Notifications, Guidelines etc. issued thereunder.

The Secretarial Audit Report and the Annual Secretarial Compliance Report for the financial year ended 31st March, 2025 are unmodified i.e. they do not contain any qualification, reservation, or adverse remark.

Appointment of M/s Chandrasekaran , Practicing

Company Secretaries as Secretarial Auditor

Pursuant to the amended provisions of Regulation 24A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI LODR Regulations') vide SEBI Notification dated 12th December, 2024 and provisions of Section 204 of the Companies Act, 2013 ('Act') and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Audit Committee and the Board of Directors at their meetings held on May 17, 2025 have approved and recommended the appointment of M/s Chandrasekaran Associates, Peer Reviewed Firm of Company Secretaries in Practice ( Firm Registration No. P1988DE002500) as Secretarial Auditor of the Company to hold office for a period of 5 (Five) consecutive financial years, from the conclusion of the 461h Annual General Meeting to be held in the year 2025 until the conclusion of the 51st Annual General Meeting to be held in the year 2030 subject to the approval of the shareholders at the 46th Annual General Meeting.

Cost Auditors and Cost Audit Report

Pursuant to Section 148(1) of the Companies Act, 2013 the Company is required to maintain cost records as specified by the Central Government and accordingly such accounts and records are made and maintained. Pursuant to Section 148(2) of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Company is also required to get its cost accounting records audited by a Cost Auditor. Accordingly, the Board, at its meeting held on 8th June, 2024 has on the recommendation of the Audit Committee, re-appointed M/s. Rajan Sabharwal & Associates, Cost Accountants to conduct the audit of the cost accounting records of the Company for 2024-25 on remuneration of ' 1,00,000 plus out of pocket expenses and applicable taxes. The remuneration is subject to the ratification of the Members in terms of Section 148 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 and is being accordingly placed before the Members for ratification. The cost audit report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

M/s Rajan Sabharwal & Associates were appointed as the Cost Auditors of the Company for 2024-25.

The Company has received consent from M/s. Rajan Sabharwal & Associates, cost auditors for appointment as

Cost Auditors of the Company for FY 2025-26 which was approved by the Board of Directors in their meeting held on 17th May, 2025.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, none of the auditors have reported any instances of fraud committed against the Company by its officers or employees to the Audit Committee as required to be reported under Section 143 (12) of the Act.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company believes in promoting a culture of honesty, transparency, and accountability. The Vigil Mechanism ensures that adequate safeguards are provided against victimisation of the whistle blower, who can raise concerns through designated channels, including anonymous reporting. All concerns reported under this mechanism are investigated promptly and thoroughly, and appropriate action is taken based on the investigation outcome.

In accordance with the provisions of Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has established a Vigil Mechanism and adopted a Whistle Blower Policy to provide a framework for directors and employees to report genuine concerns or grievances regarding unethical behaviour, actual or suspected fraud, or violation of the Company's Code of Conduct.

The Audit Committee of the Board oversees the functioning of the vigil mechanism and reviews the findings, if any. The Policy also provides access to the Chairperson of the Audit Committee in exceptional cases.

The details of this Policy are explained in the Corporate Governance Report which forms a part of this Annual Report and also hosted on the website of the Company at https://happyforgingsltd.com/wp-content/uploads/7075/07/ Whistle-Blower-Policy.pdf

There were no instances of reporting under vigil mechanism during the financial year ended 31st March, 2025.

annual return

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company in Form MGT-7 for financial year 2024-25 is available on the website of the Company at

https://happyforgingsltd.com/investors/regulation-46- disclosures/

deposits

During the year under review, the Company has not accepted any deposits from the public within the meaning of Sections 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. As the Company has not accepted any deposit during the financial year under review there is no noncompliance with the requirements of Chapter V of the Act.

credit rating

The credit rating of the Company is as below:

CRISIL has reaffirmed "CRISIL AA/Stable" rating for various bank facilities.

ICRA has assigned long-term rating of [ICRA] AA and shortterm is [ICRA] A1+. The outlook on the long-term rating is Stable.

Details of the same are provided in the Corporate Governance Report.

corporate governance

As per Regulation 34(3) read with Schedule V of the Listing Regulations, a separate section on corporate governance practices followed by the Company, together with a certificate from M/s Chandrasekaran Associates, Practicing Company Secretaries confirming compliance with the same has been disclosed under the Corporate Governance Report section of this Annual Report.

A certificate of the Managing Director and Chief Financial Officer of the Company in terms of Listing Regulations, inter alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is also annexed. Also, a declaration signed by the Managing Director stating that members of the board and senior management personnel have affirmed the compliance vide Code of Conduct of the Board and senior management is attached to the report on corporate governance.

management discussion & analysis report

The Management Discussion and Analysis Report in compliance with Regulation 34(2)(e) of Listing Regulations is provided in a separate section and forms an integral part of this report.

report

Pursuant to Regulation 34(2)(f) of SEBI LODR Regulations and with effect from the financial year 2022-23, the top 1,000 listed companies based on market capitalisation shall submit a Business Responsibility and Sustainability Report describing the initiatives taken by the Company from an environmental, social and the governance perspective.

The BRSR report is annexed as "Annexure-7" to this Report.

human resources & industrial relations

The Company believes in promoting a workplace environment that encourages innovation, collaboration, and continuous learning. Various employee engagement programs, training sessions, and health and wellness initiatives were conducted during the year to enhance employee satisfaction and productivity The management continues to work closely with employees and labour representatives to ensure a positive and transparent working environment. A section on Human Resources/ Industrial relations is provided in the Management Discussion and Analysis Report which forms part of the Annual Report.

disclosure regarding issue of employee stock options

Employee Stock Options have been recognised as an effective instrument to attract talent and align the interest of employees with that of the Company, providing an opportunity to the employees to share in the growth of the Company and to create long term wealth in the hands of employees, thereby acting as a retention tool.

The Company had formulated Happy Forgings ESOP Scheme 2023 pursuant to the resolution passed by the shareholders on 31st July, 2023, and approved maximum of 1,342,485 options under the ESOP Scheme. As on the date of this report, 392,687 options have been granted by our Company under the ESOP Scheme. As on financial year ended on 31st March, 2025, the Company has one Employee's Stock Option Plan, namely, Happy Forgings ESOP Scheme 2023.

Further, during the financial year, ESOPs were allotted twice.

The details are given below:

The ESOP plan of the Company is in compliance with the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI SBEB and Sweat Equity Regulations") as amended from time to time. The Nomination & Remuneration Committee monitors the ESOP Scheme in compliance with the Act, SEBI SBEB and Sweat Equity Regulations and SEBI LODR Regulations. A Certificate from Secretarial Auditors of the Company, confirming that the above ESOP Scheme has been implemented in accordance with the SEBI (SBEB and Sweat Equity Regulations) as amended from time to time and are as per the resolutions passed by the Members of the Company will be available for the inspection of the Members of the Company. Disclosure on various plans, details of options granted, shares allotted upon exercise, etc. as required under SEBI SBEB and Sweat Equity Regulations and Companies (Share Capital and Debentures) Rules, 2014 is enclosed as Annexure -8''.

AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance towards sexual harassment at workplace and is committed to provide a safe and secure working environment for all employees.

In accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules made thereunder, the Company has constituted an Internal Complaints Committee (ICC) to look into complaints, if any, relating to sexual harassment.

The policy on prevention of sexual harassment at workplace can be accessed through the below link:

https://happyforainasltd.com/wp-content/uploads/7073/09/

Prevention-of-Sexual-Harassment-at-Workplace-Policy-

Happy-Forgings-Limited.pdf

During the year under review, no cases were filed under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

meetings and general meetings

During the Financial Year 2024-25, the Company has complied with all the relevant provisions of the applicable mandatory Secretarial Standards i.e. SS-1 and SS-2, relating to "Meetings of the Board of Directors" and "General Meetings", respectively issued by the Institute of Company Secretaries of India, and notified by Ministry of Corporate Affairs.

code of conduct for prevention of insider trading in company's securities

In accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 as amended from time to time, the Company has complied and formulated a Code of Conduct for Prevention of Insider

Trading Policy, which prohibits trading in shares of the Company by insiders while in possession of unpublished price sensitive information in relation to the Company and following link

https://happyforainasltd.com/wp-content/uploads/7075/07/

Policv-on-Prohibition-of-Insider-Tradina.pdf

The objective of this Code is to protect the interest of Shareholders at large, to prevent misuse of any price sensitive information and to prevent any insider trading activity by way of dealing in securities of the Company by its Designated Persons. Ms. Bindu Garg, Company Secretary and Compliance Officer of the Company is authorised to act as Compliance Officer under the Code.

The code is applicable to all directors, designated persons and their immediate relatives and connected persons who have access to unpublished price sensitive information .

Further, the Company has maintained a Structural Digital Database (SDD) pursuant to provisions of regulations 3 (5) and (6) of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

Your directors state that:

1. No material changes and commitments affecting the financial position of the Company have occurred from the close of the financial year ended 31s1 March, 2025 till the date of this report.

2. There was no change in the nature of business of the Company during the financial year ended 31st March, 2025.

3. During the Financial Year under review no significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operation in future.

4. During the financial year under review no disclosure or reporting is required with respect to issue of equity shares with differential rights as to dividend, voting or otherwise, issue of Sweat equity shares and Buyback of shares.

5. During the Financial Year under review, the Company neither made any application nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016).

6. The Company serviced all the debts & financial commitments as and when they became due with the bankers or Financial Statements.

7. The Company does not have any holding company. Further, the subsidiary company has not paid any commission/ remuneration to the Managing Directors and Whole Time Directors of the Company.

8. The 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: Not applicable

acknowledgement

Your directors, place on records their sincere appreciation for the continued co-operation and support extended to the Company by all the stakeholders. Your directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels, amidst the challenging time.

The Directors are thankful to the esteemed shareholders for their support and the confidence reposed in the Company and its management and thank the Company's vendors, investors, business associates, Central/State Government and various departments and agencies for their support and co-operation.