HBL Engineering Ltd

Dear Members,

Your Directors take pleasure in presenting the Th i rty-eig hth Annual Report for the financial year ended on March 31, 2024. The standalone financial performance is presented below prepared in accordance with the Ind AS notified under the Companies (Indian Accounting Standards) as amended.

Performance Review and operating results

Standalone revenue from operations witnessed a growth of over 63% at C2,208.59 Crores in FY 2024, against previous years revenue of C1,349.75 Crores. The profit after tax for the financial year 2024 was C263.79 Crores as compared to previous years' C95.54 Crores which is around 176% higher. Exceptional income is net of monetization of non-productive assets and assets written off during the year.

For detailed presentation on the segment-wise performance of the reporting period, future growth, risks and opportunities, please read the Management Discussion and Analysis section of this annual report.

Dividend

Your Directors are pleased to recommend a final dividend of 50% (i.e. C0.50 paise per equity share of C1 each fully paid up) for the Financial Year 2023-24 subject to the approval of the members at the ensuing annual general meeting. The proposed final dividend, if approved by the members, would involve cash out flow of C13.86 Crores and will be paid subject to deduction of applicable tax pursuant to Finance Act, 2020. Pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company had formulated a Dividend Distribution Policy ('the Policy'). The Policy is available on the Company's website at https://hbl.in/reports/HBL-Policies.pdf.

The details of book-closure and record date for entitlement of members to receive dividend, if approved, for the financial year March 31, 2024 is given in the notes to the notice of annual general meeting of this annual report.

Consolidated Financial Statement

The Consolidated Financial Statements of the Company, its subsidiarles and associates, prepared in accordance with the Companies Act, 2013 and applicable Indian Accounting Standards along with all relevant documents and the Auditors' Report form part of this annual report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiaries and associates.

The Consolidated Revenue from operations was C2,233.35 crores in the current year as compared to C1,368.68 crores in the previous year, registering substantial increase. The consolidated profit after tax was C280.89 crores as against C98.65 crores in the previous year.

A statement containing the salient features of the Financial Statement of the subsidiary companies is attached to the Financial Statement in Form AOC-1 pursuant to Section 129(3) of the Companies Act, 2013.

Additionally, the Company will make available the said financial statement of the subsidiary companies pursuant to the provisions of Section 136 upon a request by any Member of the Company or its subsidiary(ies) including associate companies. These financial statements of the Company, the subsidiary(ies) and associate companies would be available on the website of the Company at https://hbl.in/Investors-Details.php.

Subsidiary and Associate Companies (as on March 31, 2024)

As per the notification issued by the Ministry of Corporate Affairs on July 27, 2016 with regard to Companies (Accounts) Amendment Rules, 2016, the report of the Board shall contain highlights of performance of subsidiaries, associates companies and their contribution on overall performance of the company. Accordingly, we hereby furnish the following:

The Consolidated Financial Statements presented by the Company include the financial results of its subsidiary and associates companies prepared in accordance with the Companies Act, 2013 (Act) and applicable Ind AS notified under the Companies (Indian Accounting Standards) Rules 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 as amended.

There has been no material change in the nature of the businesses of the subsidiaries except as disclosed hereunder.

Performance of subsidiaries and associates and their contribution on overall performance of the Company:

The details with respect to contribution to assets and other information are provided in Form AOC-1 attached to the financial statements of the Company.

Share Capital

The paid up-capital of the Company is C27,71,94,946 divided into 27,71,94,946 equity shares of C1 each, fully paid-up. Company has not issued different class of securities except equity. There is no change in the share capital of the Company.

Material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of the report.

There were no material changes and commitments affecting the Company's financial position between the end of the financial year and the date of this Report.

Directors and Key Managerial Personnel (KMP)

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Advay Bhagirath Mikkileneni (DIN 09207003) will retire by rotation at the 38th AGM and being eligible, has offered for re-appointment.

Pursuant to the recommendation of Nomination and Remuneration Committee, the Board has, approved the appointment of Mr. Narsing Rao Singayapally (DIN 00800362) and Mrs. Aparna Surabhi (DIN: 01641633) as an Additional Director (Non-Executive Independent Director) with effect from February 07, 2024 and May 27, 2024 respectively to hold office upto the date of ensuing annual general meeting, subject to approval of the shareholders of the Company. Necessary resolution for their appointment is being placed for the approval of shareholders as part of the notice of the 38th AGM. Brief profile of the appointees have been provided elsewhere in the annual report.

In the opinion of the Board, all the Independent Directors possess requisite qualifications, experience, expertise and integrity for the purpose of Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014.

On the recommendation of Nomination and Remuneration Committee, the Board has, appointed of Mr. Mikkilineni Satyanarayana Subramanya Srinath (MSS Srinath) (DIN 00319175) as an Additional Director with effect from May 27, 2024 who will hold office upto the date of this annual general meeting. The Board also appointed Mr. MSS Srinath as an Executive Director, subject to approval of the members of the Company in the ensuing annual general meeting. Necessary resolutions for his appointment as Director as well as Executive Director is being placed for the approval of shareholders as a part of the notice of the 38th AGM.

During the year, none of the non-executive directors of the Company had any pecuniary relationship or transactions with the Company except for the sitting fee paid for attending the Board meetings.

Change in Key Managerial Personnel

During the year under review, there were no changes Key Managerial Personnel.

Number of meetings of the board

Five meetings of the board were held during the reporting year. For details of the meetings of the board, please refer to

the Corporate Governance Report section, which forms part of this report.

Committees of the Board

As required under the Companies Act, 2013 and the SEBI Listing Regulations, your Company has constituted various Statutory Committees. Additionally, the Board has formed other governance committees and sub-committees to review specific business operations and governance matters including any specific items that the Board may decide to delegate. As on March 31,2024, the Board has comprised the following committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Corporate Social Responsibility Committee

4. Stakeholders' Relationship Committee

5. Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate Governance, which forms a part of this Report. Further, during the year under review, all recommendations made by the various committees have been accepted by the Board.

Board evaluation

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and SEBI Listing Regulations. The performance of the board was evaluated by the Board after seeking inputs from all the directors on the basis of 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 on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc. The above criteria 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 independent directors, performance of non-independent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.

The Board and the Nomination and Remuneration Committee 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.

At the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation

of independent directors was done by the entire Board, excluding the independent director being evaluated.

Policy on directors' appointment and remuneration and other details

The Company's policy on Directors'appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which forms part of the Directors' report.

Audit committee

The details pertaining to composition of Audit Committee are included in the report on corporate governance, which forms part of this report. The Board of Directors has accepted the recommendations of the Audit Committee placed at respective meetings.

Risk Management

The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee 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. All the identified risks are managed through continuous review of business parameters by the management and the board of directors is also informed of the risks and concerns.

Internal financial controls

Pursuant to Section 134 of the Companies Act 2013, the Directors state that the Board, through the operating management has laid down Internal Financial Controls to be followed by the Company and such policies and procedures were adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically. To the best of their knowledge and ability and inputs provided by various assurance providers confirm that such financial controls are adequate with reference to the size and operations of the Company and no reportable material weakness or deficiency in the design or operation of internal financial controls was observed.

Particulars of loans, guarantees and investments

In compliance of Section 186 of the Act, HBL made financial investment of C86.67 Crores in Tonbo Imaging India Private Limited, Bangalore and a nominal investment in Tonbo Imaging Pte Ltd, Singapore during the reporting period. HBL holds 15.83% of the share capital in Tonbo on fully diluted basis.

HBL also acquired 60% shareholding in TTL Electric Fuel Private Limited from its Subsidiary Company Torquedrive Technologies Private Limited. Consequent to such acquisition, TTL Electric Fuel Private Limited became a subsidiary of HBL. The unsecured loan of C2.20 crores crores and corporate guarantee to Bank for C 12.71 Crores for the credit facilities availed by TTL Electric Fuel Private Limited continues. Other particulars of loans, guarantees and investments have been disclosed in the financial statements.

Transactions with related parties

All contracts/ arrangements/ transactions entered by the Company during the FY 2023-24 with related parties were on an arm's length basis and in the ordinary course of business and approved by the Audit Committee. Certain transactions, which were repetitive in nature, were approved through omnibus route.

As per the SEBI Listing Regulations, if any Related Party Transactions ('RPT') exceeds C1,000 crore or 10% of the annual consolidated turnover as per the last audited financial statement whichever is lower, would be considered as material and would require Members approval. In this regard, the Company has obtained necessary approval of the members at the previous annual general meeting. However, there were no material transactions of the Company with any of its related parties as per the Act. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure I in Form AOC-2.

The details of RPTs during FY 2023-24, including transaction with person or entity belonging to the promoter/ promoter group which hold(s) 10% or more shareholding in the Company are provided in the accompanying financial statements.

During the FY 2023-24, the Non-Executive Directors of the Company had no pecuniary relationship or transaction with the Company other than sitting fees, commission and reimbursement of expenses, as applicable.

Pursuant to the requirements of the Act and the SEBI Listing Regulations the Company has formulated a policy on RPTs and is available on Company's website URL: https://hbl.in/reports/ HBL-Policies.pdf

Corporate Social Responsibility

The Company has a Board level committee that supervises its Corporate Social Responsibility (CSR) activities. The brief outline of the CSR Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure II of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Secretarial Standards

The 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.

Business responsibility and sustainability report

Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, the Business Responsibility and Sustainability Report ('BRSR') on initiatives taken from an environmental, social and governance perspective, in the prescribed format is available as a separate section in the Annual Report.

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

i. in preparation of the annual accounts, the applicable Ind AS accounting standards have been followed and there are no material departures;

ii. they have selected such accounting policies as per Ind AS 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 at the end of the financial year and of the profit of the Company for that period;

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 fraud and other irregularities;

iv. they have prepared the annual accounts on a going concern basis;

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

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

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, cost, statutory and secretarial auditors and external consultants and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2023-24.

Extract of annual return

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, the extract of Annual Return is given in Annexure III in the prescribed Form MGT-9, which forms part of this report.

Information regarding employees and related disclosures

Your Company consistently believes in concerted efforts in talent management and succession planning practices, strong performance management and learning and training initiatives. Rewards and recognition are commensurate with performance and that employees have the opportunity to develop and grow.

During the year, there were no complaints relating to child labor, forced labor, involuntary labor, sexual harassment in the last financial year and pending as on the end of the financial year.

Disclosure as required under Section 22 of Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company believes in providing a healthy environment to all HBL Employees and does not tolerate any discrimination or harassment in any form. The Company has in place a gender neutral, Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. This policy is frequently communicated in assimilation programs and at regular intervals to all HBL employees. Following are some of the awareness programs imparted to train HBL Employees and Internal complaints committee (ICC).

1. It is mandatory for every new joiner to undergo a program on 'Prevention of Sexual Harassment' during induction program.

2. The Internal Complaints Committee is trained by external agency when the committee members are on-boarded to the committee.

3. Policy of 'Prevention of Sexual Harassment' at workplace is available on internet for HBL employees to access as and when required.

4. The 'Prevention of Sexual Harassment' policy is placed in conspicuous places for better visibility and communication of the policy. The posters are also displayed in regional languages at all HBL offices.

HBL has setup an Internal Complaints Committee (ICC) both at the Head office / Corporate office and at every major location where it operates in India. ICC has equal representation of men and women. ICC is chaired by Ms. Sucharita Palepu, external women representation.

ICC investigates the case(s) and provides its recommendations to the apex authority . The apex authority upon receiving the recommendations from ICC arrives at the conclusion and acts upon such recommendations.

Penal Consequences of Sexual Harassment ("SH") and the constitution of the ICC is displayed at conspicuous places.

Human resources

Please refer to the paragraph on Human Resources / Industrial Relations in the Management Discussion & Analysis section for detailed analysis.

Diversity and inclusion

Diversity and inclusion at workplace helps nurture innovation, by leveraging the variety of opinions and perspectives coming from employees with diverse age, gender and ethnicity. The Company assists the employees through awareness drives or personal interactions, to build an approach of open mindedness, express of thoughts and culture. The Company employed 5.92% women employees in FY 2023-24 vis- a-vis 5.63% in FY 2022-23.

Particulars of employees

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

a. The ratio of the remuneration of each Non-Executive director to the median remuneration of the employees of the Company for the financial year: Not Applicable as none of the Non-Executive Director was paid any remuneration.

b. The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary in the financial year:

c. The percentage increase in the median remuneration of employees in the financial year: 9.22%

d. The number of permanent employees on the rolls of Company: 1,875 (as at 31 March 2024)

e. Comparison of the remuneration of the key managerial personnel against the performance of the Company:

f. Comparison of remuneration of each the key managerial personnel (March 31,2024):

g. The key parameters for any variable component of remuneration availed by the directors:

Commission on net profits was paid to Chairman and Managing Director only in addition to the monthly remuneration as disclosed elsewhere in this report.

h. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year: Not applicable.

Disclosure requirements

As per listing Regulations, corporate governance report with auditors' certificate thereon and management discussion and analysis are attached separately, which form part of this report.

Vigil Mechanism / Whistle blower policy

The Company has formulated a vigil mechanism /whistle blower policy to provide a vigil mechanism for employees including directors of the Company to report genuine concerns.

The provisions of this policy are in line with the provisions of the Section 177(9) of the Act and the Regulation 22 of the SEBI (LODR) Regulations, 2015.

Deposits from public

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

Information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in the Annexure hereto.

Corporate Governance Report

Pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, a separate section in

Annexure VII titled "Report on Corporate Governance" is attached to the Annual Report.

Statutory Auditors

M/s LNR Associates, Chartered Accountants (FRN 05381S) Visakhapatnam who are the Statutory Auditors of the Company have been appointed by the members at the 36th Annual General Meeting (AGM) of the Company held on September 27, 2022 for a period of five years to hold office till the conclusion of AGM in 2027 subject to ratification of members at every year AGM. Accordingly, ratification of their appointment is being recommended at the ensuing AGM.

The Report given by M/s. LNR Associates, Chartered Accountants on the financial statements of the Company for the year 2023-24 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report. During the year under review, the Auditors had not reported any matter under Section 143 (12) of the Act. Therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Companies Act, 2013.

Cost Auditors

As per Section 148 of the Act, the Company is required to have the audit of its cost records conducted by a Cost Accountant. Your Board, on the recommendation of Audit Committee has appointed M/s K. Narashima Murthy & Co., Hyderabad, Cost Accountants (FRN 000042) as Cost Auditors of the Company for conducting the audit of cost records of the Company. Your Board, on recommendation of the Audit Committee, proposes to re-appoint them as Cost Auditors for 2024-25, subject to the approval from Central Government, if any.

Disclosure under Section 148(1) of the Companies Act, 2013

The Company has been maintaining required cost records as specified under Section 148(1) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 as mended from time to time.

Secretarial Auditors

CS Vinay Babu Gade, Practicing Company Secretary issued a Secretarial Auditor for the financial year 2023-24 and his secretarial audit report is attached to this report in Annexure IV. There are no qualifications, adverse comments and observations in the secretarial audit report for the year 2023-24.

General

Your Directors state that no disclosure or reporting is required in respect of the following matters as there were no transactions on these items during the year under review:

S There are no significant material orders passed by the Regulators or Courts or Tribunal, which would impact the going concern status of the Company and its future operation. However, Members attention is drawn to the Statement on Contingent Liabilities and Commitments in the Notes forming part of the Financial Statement.

S No fraud has been reported by the Auditors to the Audit Committee or the Board.

S There has been no change in the nature of business of the Company.

Cautionary Statement

Statements in this Annual Report, particularly those relate to Management Discussion and Analysis, describing the Company's objectives, projections, estimates and expectations, may constitute 'forward-looking statements' within the meaning of applicable laws and regulations to enable shareholders and investors to comprehend our prospects. Although the expectations are based on reasonable assumptions, the actual results might differ materially from those expressed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as plant breakdowns, industrial relations etc.

Acknowledgements

Your Directors place on record their sincere appreciation towards the Company's valued customers and shareholders for the support and the confidence reposed by them in the management of the company and look forward to the continuance of this mutually supportive relationship in future. Your Directors take this opportunity to thank all the Company's Bankers, concerned Central and State Government Departments, Agencies for their support and co-operation to the Company. The Board has special appreciation for the employees for their dedicated services and their ability to deliver good results in the future.