Pavna Industries Ltd

To,

The Members,

Your Directors are pleased to present 29^th Annual Report on the business and operations of the Company along with Audited Financial Statements (Standalone and Consolidate) for the financial year ended on March 31, 2023.

FINANCIAL RESULTS

Financial Performance of the Company for the year ended 31^st March, 2023 is summarized below:

(Rs. In Lakh)

Standalone Operational Performance

During the review, the Company has generated revenue from operation Rs. 26,323.09 lakh which is 5.49% higher than Rs. 24,954.28 lakh in FY 2021-22. Operating Expenses of the Company has also increased by 4.70% than to last FY.

The Company has booked Profit Before Tax (PBT) of Rs. 1002.12 Lakh and Net Profit of Rs. 728.53 lakh compare to last year of Rs.881.83 lakh and Rs. 635.33 lakh respectively.

Subsidiary Operational Performance

The Company has five subsidiaries. Performance of the subsidiaries have contributed positive increase in the revenue as well as operational profit as per below table shows-

(Rs. In Lakh)

Consolidated Operational Performance

During the year, under review, consolidated revenue from operations for the year ended as on March 31, 2023 is Rs. 36,222.20 lakhs, while last year operational revenue was 31,561.19 lakh. However the expenses have also been increased by 15.20% compare to last year. The Company has booked Net Profit of Rs. 863.56 Lakh.

DIVIDEND

To strengthen the financial position of the Company, your Directors recommended, declared and paid dividend of Rs.1/- per share of Rs.121,80,800/-during financial year 2022-23

RESERVE & SURPLUS

The Company has transferred net profit of Rs. 746.14 lakh to the reserve and Surplus during the financial year.

SHARE CAPITAL

The Paid Share Capital of the Company as on 01^st April, 2022 was 60,90,400 equity shares of Rs.10/- each aggregating to Rs. 609.04 Lakh. The Company issued bonus shares in the ratio of 1:1 of 60,90,400 equity shares of Rs.10/- each during the year. So. Paid up Share Capital as on 31^st March, 2023 was 1,21,80,800 equity shares of Rs.10/-each aggregating to Rs. 1,218.08 Lakh.

MIGRATION TO NSE MAIN BOARD AND LISTING ON BSE MAIN BOARD

The Company completed the process of Migration from National Stock Exchange (Emerge) to NSE Main Board and got listed on Bombay Stock Exchange Main Board on 1^st June, 2023.

CHANGES IN NATURE OF BUSINESS

Your Company is engaged in manufacturing of wide range of automotive components for reputed Original Equipment Manufacturers (OEMs) as per their requirements primarily catering to various vehicle segments, including, passenger vehicles, two-wheelers, three-wheelers, heavy and light commercial vehicles and off-road vehicles.

There is no change in the nature of business during the year under review.

PREVENTION OF SEXUAL HARASSMENT

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. Internal Complaints Committee (‘ICC') is in place for all works and offices of the Company to redress complaints received regarding sexual harassment. During the FY 2022-23, the Company has not received any complaint.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Act, read along with Rule 8 of the Companies (Accounts) Rules, 2014, is as follows-

A. CONSERVATION OF ENERGY

The Company has always been conscious about conservation of energy in its Manufacturing Plants which leads to optimized consumption of non-renewable fossil fuels, energy productivity, climate change mitigation and reduction in operational costs. Your Company carries out its operations in an environmental friendly manner and continuously active to find ways to for the betterment of the Company as well as for the society.

During the year, the Company has consumed total 125.68 lakh KWH renewable electricity in its operation.

Energy Conservation projects have been implemented at all Plants and Offices of the Company in a planned and budgeted manner. In FY 2022-23, all Plants achieved significant reduction in fixed energy consumption on non-working days by administrative and process controls. Some of the major decision includes:

- a machinery based meters has been installed for each machine to calculate consumption.

- Gas furnace replaced with electricity to control environment pollution from release of Carbon Monoxide.

- Installed in our all plants cooling towers to cut down use of water and chemicals that also lower the risk of bacterial contamination.

- Replaced all lighting equipment with LED to reduce consumption of electricity.

- Installed exhaust blowers in every plants.

- Installed Automatic Dispensing Cabinet Machines interlock systems with timer that helps in control of waste of electricity.

B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

Efforts made towards innovation, technology development, absorption and adaptation

- The Company used Annual Technology Planning & Development cycle for managing its engineering and technology initiatives. The process framework enables identification, development and deployment of the right technologies for future products. Making use of the Technology Creation and Development System (TCDS) process, the same has been institutionalized across its businesses.

- The Company is setting up lean and agile innovation hubs. These hubs will operate like start-ups with focus on testing of solutions and go-to-market strategies.

Specific areas in which R & D carried out by the Company

C. FOREIGN EXCHANGE EARNINGS & OUTGO

During the year the Company has imported raw material out of India of Rs 14.88 Lakh Foreign Exchange Earnings and Outgo

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

One of the subsidiaries of the company M/s Pavna Goyam Auto Private Limited ceased to be a subsidiary w.e.f 11.05.2023.

EXTRACT OF ANNUAL RETURN

Pursuant to Sections 92 & 134(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return for F/Y 2022-23 is available on the website of the Company.

HOLDING, SUBSIDIARY, JOINT ARRANGEMENTS AND ASSOCIATE COMPANIES

The Company has 05 subsidiaries as at March 31, 2023 and detail subsidiaries as follows-

One of the subsidiaries of the company M/s Pavna Goyam Auto Private Limited ceased to be a subsidiary w.e.f 11.05.2023.

CORPORATE SOCIAL RESPONSIBILITY

During the year under review the Company has constituted CSR committee and spent Rs. 7.49 lakh under CSR activities as per the section 135 of the Companies Act, 2013 and Rules made thereunder.

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year in the format prescribed in the Companies (CSR Policy) Rules, 2014 are set out in Annexure - I

DIRECTOR S AND KEY MANAGERIAL PERSONNEL

As on date, the Board of the Company comprises of total 6 (Six) directors are as set out in Annexure- III. Appointment / Re-appointment

In accordance with provisions of the Act and the Articles of Association of the Company, Mrs. Priya Jain, Executive Director (DIN: 03355623) is liable to retire by rotation and is eligible for re-appointment.

The disclosures required pursuant to Regulation 36 of the SEBI Listing Regulations and the SS- 2 on General Meeting are given in the Notice of Annual General Meeting ('AGM'), forming part of the Annual Report.

Independent directors

In terms of Section 149 of the Act and the SEBI Listing Regulations, following are the Independent Directors of the Company as on date of this report:

1. Mr. Achyutanand Ramchandra Mishra (DIN: 0940098) (w.e.f 01.09.2023)

2. Mr. Naozer Firoze Aibara (DIN: 08759817)

3. Mr. Dhruv Jain (DIN: 09835701) (w.e.f 14.02.2023)

4. Ms.Himani Bhootra (DIN: 09811030) (w.e.f 17.04.2023)

5. Ms.Priyanka Moodra (DIN: 09485101) (w.e.f 14.08.2023)

All Independent Directors of the Company have given declarations under ' Section 149(7) of the Act, that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations. In terms of Regulation 25(8) of the Listing Regulations, the Independent Directors have confirmed that they are not aware of any circumstance or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. The Independent Directors of the Company have undertaken requisite steps towards the inclusion of their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs, in terms of Section 150 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

In the opinion of the Board, the Independent Directors possess the requisite expertise and experience and are persons of high integrity and repute. They fulfill the conditions specified in the Companies Act, 2013 ('the Act') as well as the Rules made thereunder and are independent of the management.

Key Managerial Personnel

In terms of Section 203 of the Act, Mr. Makarand Mahajan (PAN: ABUPM4863G) Chartered Accountant resigned from the position of Chief Finance Officer w.e.f 31^st July, 2023 and Mr. Ravindra Madan Mohan Agrawal (PAN:ACOPA1328B) Chartered Accountant has been appointed by the Board of Director in the meeting held on 1^st September, 2023 as Chief Financial Officer and Key Managerial Personnel w.e.f 11^th September, 2023.

Mr. Ravindra Jagannathrao Pise has been appointed as a Chief Executive Officer and KMP of the Company w.e.f. 01st September, 2023.

Ms. Charu Singh is the Company Secretary and Compliance Officer of the Company.Ms. Kanchan Gupta, an associate Member of ICSI having membership no.A64223 has been appointed as an Additional Company Secretary and Key Managerial Personnel w.e.f 1^st September, 2023.

MEETINGS OF THE BOARD

During the year, the Board of Directors met 6 times. For details, please refer to the Report on Corporate Governance, which forms part of this Annual Report as Annexure II.

COMMITTEES OF THE BOARD

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

The following Committees constituted by the Board function according to their respective roles and defined scope:

• Audit Committee

• Nomination and Remuneration Committee

• Corporate Social Responsibility Committee

• Stakeholders' Relationship 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.

GENERAL MEETINGS

During the year, Members of the Company met 1 time. For details, please refer to the Report on Corporate Governance, which forms part of this Annual Report as Annexure II.

PARTICULARS OF EMPLOYEES

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,2014 is annexed to the Report as Annexure-III.

Statement containing particulars of Top employees and the employees drawing remuneration in excess of limits prescribed under Section 197 (12) of the Act read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of this report. In terms of proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Shareholders, excluding the aforesaid Annexure.

The said Statement is also open for inspection. Any member interested in obtaining a copy of the same may write to the Company Secretary.

BOARD EVALUATION

The annual evaluation process of the Board of Directors, individual Directors and Committees was conducted in accordance with the provision of the Act.

The Board evaluated its performance 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.

PUBLIC DEPOSITS

The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013. The Company does not have any unclaimed deposits as of date.

PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES OR SECURITY

Details of loans, guarantee and investments covered under the provisions of section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the Notes forming part of the Audited Financial Statements of the Company.

CONSOLIDATED FINANCIAL STATEMENT

The consolidated financial statements of the Company and its subsidiaries for FY 2022-23 are prepared in compliance with the applicable provisions of the Act and as stipulated under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI Listing Regulations] as well as in accordance with the Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015. The audited consolidated financial statement together with the Independent Auditor's Report thereon form part of this Annual Report. Pursuant to Section 129(3) of the Act, 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 the provisions of Section 136 of the Act, the Company will make available the said financial statement of the subsidiary companies upon a request by any member of the Company or its subsidiary companies. These financial statements of the Company and the subsidiary companies will also be kept open for inspection by any member and the same would also be available on the Company's website https://www.pavna.in.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All contracts/ arrangements/ transactions entered by the Company during the year with related parties were on an arm's length basis and mostly in the ordinary course of business. There were no material related party transactions (RPTs) undertaken by the Company during the year that require Shareholders' approval under Regulation 23(4) of the SEBI Listing Regulations or Section 188 of the Act. The approval of the Audit Committee was sought for all RPTs. Certain transactions which were repetitive in nature were approved through omnibus route. All the transactions were in compliance with the applicable provisions of the Act and SEBI Listing Regulations.

Detail of transaction with related party shown in Form AOC-2.

RISK MANAGEMENT

The Board takes responsibility for the overall process of risk management throughout the organization. Our business units and corporate functions address risks through an institutionalized approach aligned to our objectives. This is facilitated by corporate audit. The Business risk is managed through cross-functional involvement and communication across businesses. The results of the risk assessment are presented to the senior management. The Senior Management reviews business risk areas covering operational, financial, strategic and regulatory risks.

VIGIL MECHANISM

The 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 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 Code 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 Chairperson of the Audit Committee of the Company for redressal. No person has been denied access to the Chairperson of the Audit Committee. The policy of vigil mechanism is available on the Company's website.

STATUTORY AUDIT

Pursuant to section 139 of the Companies Act, 2013 and Rule 4(2) of the Companies (Audit and Auditors) Rules, 2014, M/s Rajeev Kumar & Company, Aligarh (Firm's Regn No. 000633C), is appointed as the Statutory Auditors of the Company at Annual General Meeting held on 27^th September, 2022 to hold office for 5 years until conclusion of AGM to be hold on year 2027-28. The Auditors have represented that they are not disqualified and continue to be eligible to act as the Auditor of the Company.

The Statutory Auditors' Report for the financial year ended 31^st March, 2023 forming part of the Annual Report, contains an emphasis of matter on Financials of the Company.

The Auditor of the Company have not reported any fraud or any qualification as specified under the second proviso of Section 143 (12) of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Director appointed M/s D. Sagar & Associates, (CP No. - 11547), a Company Secretaries in Practice in Aurangabad to conduct the Secretarial Audit of the Company for year ended March 31, 2023. The Report of the Secretarial Audit is annexed herewith as Annexure IV.

The said Secretarial Audit Report contains remarks or observations. The management's response is as follows on each qualification:

01. Remarks- the company is not able to identify the MSME vendors and outstanding dues of MSME vendors more than 45 days. Accordingly, the Company has not filed Form MSME-1 with respect to the outstanding payments due to the MSME vendors.

Response- The management explained that they have sent emails to the vendors but have not received any confirmation from them about their MSME registration.

02. Remarks- Form CSR-2 is applicable to the Company; the company is trying to file the form but due to system migration from V2 to V3 portal the Company is not able to file the same. The company has raised the ticket to MCA but till the date of audit no response is received, hence I am unable to comment on the non-compliance of the same.

Response- Due to migration from MCA V2 to V3 portal, the Company was not able to file the same. The company has raised the ticket to MCA but till the date of audit no response is received

03. Remarks-The Company during the year has given loans to its subsidiaries, although, the said loan has been repaid, but the company has not charged interest on loans/advances given to its subsidiaries. Therefore, up to that extent there is non-compliance of Section 186(7) of the Companies act, 2013. However, as per the statutory auditor's comment, prima facie the non-charging of interest does not hamper and is not prejudicial to the revenue interest of the company.

Response- Non-Charging of interest does not hamper and is not prejudicial to the revenue interest of the Company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

No significant or material orders were passed by the any Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

DIRECTORS' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, secretarial auditors and external agencies 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 FY 2022-23.

Pursuant to the requirements under Section 134(5) read with Section 134(3)(c) of the Act with respect to Directors' Responsibility Statement, it is hereby confirmed that:

a) in the preparation of the annual accounts for the financial year ended 31^st March, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors 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 31^st March, 2023 and of loss of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis; and

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

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

ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank the customers, supply chain partners, employees, Financial Institutions, Banks, Central and State Government authorities, Regulatory authorities and all the various stakeholders for their continued co-operation and support to the Company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the Joint Venture partners / Associates.

For and on behalf of the Board of Directors

PAVNA INDUSTRIES LIMITED

SD/-

Mr. SWAPNIL JAIN

MANAGING DIRECOR

(DIN: 01542555)

Place: Aligarh

Date: 01/09/2023