Sharda Motor Industries Ltd

Dear Members

Your's directors have pleasure in presenting the Thirty-Ninth (39)^th Board Report on the business and operations of the Company together with the financial statements for the financial year ended on 31^st March, 2024

Rs. In Lakhs

During the year under review, the total revenue from operations including other income stands to Rs. 2,89,711.65 Lakhs as against Rs. 2,74,167.23 Lakhs of previous year. Profit before taxation was Rs. 39,921.79 Lakhs as against Rs. 27,822.12 Lakhs of previous year (i.e., Increased by 43.49%). Net Profit after taxes of the Company has Increased by 43.55% year on year basis.

During the year under review, the company has not transferred any amount to the reserves. However, after closure of the financial year, the company created the Capital Redemption Reserve by transferring of Rs. 20.55 Lakhs pursuant to extinguishment of 10,27,777 equity shares of the company of face value of Rs. 2 each on June 28, 2024. The shares were bought back by the company under SMIL Buy Back – 2024 Scheme.

During the year under review; the company has not changed the nature of its Business.

There was no change in the share capital during the year under review.

Further, pursuant to Schedule V of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 ("Listing Regulations") and SEBI Notification no. SEBI/ LAD-NRO/GN/2022/66 dated January 24, 2022 and related circulars thereafter, during the year under review, there were no securities which are required to be transferred into demat suspense account or unclaimed suspense account and disclosure is not applicable for the period ended March 31, 2024. However, after the closure of financial year 2023-24, the company bought back 10,27,777 fully paid-up equity shares each having face value of INR 2/- representing 3.46% of total equity shares of the company, at a price of INR 1800/- per equity share payable in cash for an aggregate consideration of INR 18499.98 Lakhs ("Buyback Size") in accordance with the approval of the shareholders of the company through tender offer route of Stock Exchanges.

Consequently, the issued, subscribed and paid up share capital of the company reduced to Rs. 5,74,07,706 comprising of 2,87,03,853 equity shares of INR 2/- each as on June 28, 2024 pursuant to extinguishment of shares bought back by the company.

During the year under review, no company has become or ceased to be subsidiary, joint venture or associate the Company. The details of Subsidiary, Joint Venture and Associate Companies are as under :

Uddipt Mobility Private Limited

Relan Industries Finance Limited

Exhaust Technology Private Limited

Financial Performance, percentage of Holding and other financial parameters for the financial year 2023-24 of the Subsidiary, Associates and Joint Venture Companies are disclosed in the financial statements which form part of this annual report. A statement in form AOC-1, containing the salient features of the financial statements of the joint venture and associate company is provided as Annexure I.

Based on the financial performance of the company, the Board of Directors of the company at its meeting held on May 23, 2024, has recommended a final dividend of Rs. 9.92/- per equity of face value of Rs. 2 each i.e. 496 percent on the paid-up share capital, for the financial year 2023-24.

The Dividend Distribution Policy of the Company is available on the Company's website at: https://www. shardamotor.com/wp-content/uploads/2021/07/ DIVIDEND-DISTRIBUTION-POLICY.pdf The said Policy shall provide the shareholders understanding the dividend aspect of the company with the following parameters: • the circumstances under which the shareholders of the listed entities should or should not expect dividends; • the financial parameters that shall be considered while declaring dividend; • internal and external factors that shall be considered for declaration of dividend; • policy as to how the retained earnings shall be utilised; and • parameters that shall be adopted with regard to various classes of shares.

The existing composition of the Board is fully in conformity with the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") including any statutory modification(s) /amendment(s) thereof for the time being in force. During the year under review there was no change in the Directorship & Key Managerial Personnel(s) of the company. The detail composition of the Board and Committees thereof as on March 31, 2024 is given the Corporate Governance Report forming part of this Board Report.

Further, all the directors of the company have given the declaration that they are not debarred from being appointed / re-appointed or continuing as director of the Company by the virtue of any Order passed by the SEBI, Ministry of Corporate Affairs or any such statutory authority.

The company has received the declaration from all the Independent Directors confirming that they meet the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 read with the schedules and rules made there under along with declaration for compliance with clause 16 of the Listing Regulations. 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 condition's specified in the Act as well as the Rules made thereunder.

All the Independent Directors have extensive business experience and are considered by the Board to be independent of the management of the company and free from any business or other relationship, which could materially interfere with the exercise of their independent judgement and had no pecuniary relationship or transactions with the company, other than sitting fees and reimbursement of expenses incurred by them, if any, for the purpose of attending meetings of the Board / Committee of the company.

During the year under review, the shareholders of the company at its 38^th Annual General Meeting have approved the following:

Shri Nitin Vishnoi, director of the company liable to retire by rotation was re-appointed as a director of the company.

Smt. Sharda Relan, Director of the company is liable to retire by rotation at the ensuing AGM and has not offered herself for re-appointment. The Board places on record its appreciation towards the valuable guidance provided by Smt. Sharda Relan during her tenure as the director of the company.

Shri Kishan N Parikh and Shri Ashok Kumar Bhattacharya, Independent Directors of the company shall be completing their 2^nd consecutive term on September 02, 2024 as Independent Director of the company. The Board places on records its sincere appreciation for their contributions and extends gratitude to them for their invaluable guidance as Independent Directors on the Board. Their insightful contributions have played a pivotal role in steering the company's strategic direction and fostering growth.

Further, keeping in the view of substantial growth under the Chairmanship of Shri Kishan N Parikh and on the recommendation of NRC committee, the Board has approved his appointment, as Additional Director designated as Non-Executive Director of the company with effect from September 03, 2024 subject to the approval of members at this AGM. He shall hold office as Additional Director upto the date of this AGM and is eligible for appointment as Non-Executive Director, liable to retire by rotation in terms of section 152 of the Companies Act, 2013.

The Board on the recommendation of Nomination and Remuneration Committee and in accordance with provisions of the Companies Act and Listing Regulations, has Appointed Shri Navin Paul (DIN 00424944 ) as an Additional and Non-Executive Independent Director on the Board for a tenue of 5 years from August 02, 2024 to August 01, 2029 (both days inclusive), subject to the approval of Members at this AGM, He shall hold office as an Additional Director upto the date of this AGM and is eligible for the appointment as an Independent Director.

Based on recommendation of Nomination and Remuneration Committee & in accordance with provisions of the Act and Listing Regulations, Shri Nitin Vishnoi (DIN:08538925) was re-appointed as a Whole-time Director of the Company, for another term of 5 years with effect from September 03, 2024 subject to the approval of Members. The resolution seeking members' approval for his appointment forms part of the Notice.

A brief profile of the directors seeking appointment/ re-appointment at the ensuing 39^th Annual General Meeting (39^th AGM) of the Company has been provided in the explanatory statement of the Notice of this AGM. In compliance with the provisions of the Companies Act, 2013, Listing Regulations and other applicable provisions, if any, the required consents/declarations showing the willingness and confirming that he/her is eligible and not disqualified from being appointed / re- appointed / continued as director was duly received from him/her.

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations and other applicable provisions, if any, the Nomination and Remuneration Committee of the Board at its meeting held on May 23, 2024 has carried out the performance evaluation of its own and that of its committees and individual directors. A suggestive evaluation questionnaire for the performance evaluation, based on the approved criteria, was provided to all the directors for their evaluation and was also placed/presented before the members of the Board to give their comments therein for facilitating the performance evaluation of individual directors, the Board as a whole and its committees.

Based on the above, the performance of the board was evaluated through the ratings given by each director based on the structured questionnaire that was prepared after considering the approved criteria such as the board composition and structure, effectiveness of board processes, contribution toward the development of the strategy etc.

The performance of the committees was also evaluated by the Board after seeking inputs/ ratings from the committee members on the basis of the approved criteria such as the composition of committees, effectiveness of committee meetings etc. The Board deliberated and found that the overall performance of individual directors and the Board as a whole and its committees were satisfactory.

The Board of Directors has reviewed the performance of the individual directors, including both independent and non-independent, on the basis of the evaluation criteria like qualification & experience, attendance of directors at Board and committee meetings, conflict of interest, effective participation, integrity, knowledge & competencies, domain knowledge, compliance with code of conduct, independent judgment, vision, and strategy etc.

In a separate meeting of independent directors, the performance of non-independent directors, the performance of the Board as a whole, and the performance of the Chairperson were evaluated. The same was discussed in the next board meeting held after the meeting of the independent directors held on May 23, 2024 at which the performance of the Board, its committees and individual directors was also discussed. The directors expressed their satisfaction with the evaluation process. The Board also noted that the Independent Directors fulfill the independence criteria as specified in the Listing Regulations and are independent of the management of the company.

Pursuant to Section 134(3) read with Section 178 of the Act, the nomination remuneration and evaluation policy of the company lays down the criteria for determining qualifications, competencies, positive attributes for the employees of the company. It also lays down the criteria for independence for appointment of directors and policies of the company relating to remuneration of directors, Key Managerial Personnel(s) ("KMP") and other employees. The policy is available on the website of the company at https://www.shardamotor.com/ wp-content/uploads/2018/08/NRC-policy.pdf

During the year under review the audit committee comprised of four members out of which three are independent directors. The Committee is chaired by Shri Kishan N Parikh who is an Independent Director. All the members of the committee have adequate financial & accounting knowledge and background. Detailed information regarding the number of committee meetings, terms of reference, etc. are provided in the Corporate Governance Report forming part of this annual report. All recommendations of the Audit Committee, whenever made, were accepted by the Board during the financial year 2023-24.

M/s. S. R. Dinodia & Co., LLP, Chartered Accountants (Firm Registration No. 001478N/N500005) were appointed by the Members as Statutory Auditors of the Company pursuant to the provisions of Section 139 and other applicable provisions of the Act and the Companies (Audit and Auditors) Rules, 2014, for a term of 5 (five) consecutive years, from the conclusion of the 37^th Annual General Meeting of the Company held on September 20, 2022, till the conclusion of 42^nd Annual General Meeting of the Company to be held in the year 2027. During the year under review, there was no incident related to fraud that was reported to the Audit Committee by the Statutory Auditors of the Company as required under section 143(12) of the Act. The Auditors' Reports (Standalone & Consolidated) to the Shareholders does not contain any qualification, reservation or adverse remarks. The notes on Financial Statement referred to in the Auditors' Report are self-explanatory and do not require any further clarifications.

M/s.VKC & Associates, Company Secretaries in practice, bearing CP. No. 4548 were appointed as Secretarial Auditors of the Company pursuant to provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and other applicable provisions, to conduct the Secretarial Audit of the Company for the financial year 2023-24. The Secretarial Audit Report for the financial year ended March 31, 2024 is annexed as Annexure II to this Report. The Secretarial Audit Report does not contain any qualification, reservation, observation or adverse remarks.

Further, the Board of Directors of the Company at its Meeting held on May 23, 2024, has considered and approved the appointment of M/s. VKC & Associates, Company Secretaries in practice, bearing CP. No. 4548 as Secretarial Auditor of the Company for the financial year 2024-25.

In terms of Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, and based on the recommendation of the audit committee, the Board of Directors of the company has appointed M/s. Gurdeep Singh & Associates (holding M. No. 9967) as Cost Auditors of the company for conducting the cost audit for the financial year 2023-24, considering that the remuneration has also been approved by the members at the 38^th Annual General Meeting. The company has also received a letter from Cost Auditors of the Company to the effect that their appointment is within the limits prescribed as per the Companies Act, 2013 and are not disqualified from being appointed as Cost Auditors of the company.

Further, the Board of Directors of the company at its meeting held on May 23, 2024, has considered and approved the appointment of M/s. Gurdeep Singh & Associates (holding M. No. 9967) as Cost Auditors of the company for conducting the cost audit for the financial year 2024-25 subject to the ratification of remuneration by the members that is being placed placed before the ensuing 39^__ Annual General Meeting.

The cost accounts and records of the Company are duly prepared and maintained as required u/s 148 of the Companies Act, 2013.

Pursuant to the approval of Members through postal ballot on July 08, 2022, the Company adopted "Sharda Motor Industries Limited stock option scheme 2022" {ESOP Scheme}, in order to retain and incentivize key talent for driving long term objectives of the Company whilst simultaneously fostering ownership behavior and collaboration amongst employees. The brief outlines of the Scheme are as:

1. Persons eligible for Scheme: Employees of the company working in India / Outside India and shall be tenure, performance and the contribution of the employee to the growth of the company.

2. Total number of shares reserved under the scheme and under grant: The Nomination and Remuneration Committee may from time-to- time grant options to one or more employee(s), which may include recurring options to the same employee. The aggregate number of shares underlying an option that may be granted under the plan shall be decided by the Nomination and Remuneration Committee shall not exceed 3,00,000 equity shares of face value of Rs. 2, each fully paid up, of the company. The number of shared entitled the grant are 3,00,000 equity shares of face value of Rs. 2 each fully paid up, of the Company.

3. Pricing: The Exercise Price per Option shall be equal to the market price of the shares on the Grant Date or at such discount to the market price as may be determined by the Nomination and Remuneration Committee subject to applicable laws.

4. Vesting Period under Scheme: Options granted under ESOP 2022 would vest after expiry of minimum of 1 (One) year but not later than maximum of 6 (Six) years from the Grant Date of such options. The minimum Vesting Period of one year shall not apply to cases of separation from employment due to death or permanent disability.

5. The Exercise Period: Vested Options shall be maximum of 5 (Five) years from the date of vesting of such options.

From the date of approval of "Sharda Motor Industries Limited Stock Option Scheme 2022", till the end of financial year 2023-24, "No option" was granted therefore disclosure required under Rule of the Companies (Share Capital and Debentures) Rule 2014 is not applicable..

In terms of Regulation 13 of SEBI ESOP Regulations 2021, the Certificate from VKC Associates, Company Secretaries, Secretarial Auditors shall be made available for members at the forthcoming AGM.

During the year under review, the company has not made any application and nor any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

Not Applicable

The Board of Directors of the company has majorly identified/approved and complied with the following:

• Identified the ongoing projects in which the company shall undertake its CSR activities / obligation through "Sharda CSR Foundation Trust" for the financial year 2023-24.

• Opening of "Sharda Motor Industries Limited - Unspent CSR Account financial year 2023-24".

• Transferring Unspent CSR Amount that remains unspent for the financial year 2023-24 for the utilization of funds over the identified ongoing project.

• Devising of Annual Action Plan for carrying out the CSR activities for the financial year 2024-25.

Further, the company has transferred an amount of Rs. 365.33 Lakhs to "Sharda Motor Industries Limited – Unspent CSR Account financial year 2023-24, to the accomplishment of the CSR Obligations as identified by the CSR Committee & Board of Directors as ongoing project i.e. Sharda Unnati. The said amount shall be utilized in a period of three years for such activities as identified under the aforesaid ongoing projects for the financial year 2023-24 for the benefit of the Society.

Details of the composition of the committee, number of meetings, and attendance at the meetings are provided in the Corporate Governance Report forming part of this annual report. The Corporate Social Responsibility Policy of the company is available on the website of the Company at https://www.shardamotor.com/wp-content/ uploads/2016/07/Corporate-Social-Responsibility- Policy-1.pdf In terms of Section 135 and rules made thereunder an annual report on CSR activities, expenditure, committee composition etc. is given as Annexure III to the Director's report.

Pursuant to Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return for financial year March 31, 2024 is uploaded on the website of the company and the same is available on https://www.shardamotor.com/investor-relations/annual-report/

The details in terms of sub-section 12 of Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given in Annexure-IV.

The statement containing details of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in

The particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, are annexed here with marked as Annexure VI to this Report.

The particulars of Loans, guarantees, and investments under section 186 have been disclosed in the financial statements.

The particulars of contracts or arrangements with related parties referred to in section 188(1) of the Act in Form AOC - 2 are appended as Annexure-VII forming part of this report.

The policy on materiality of and dealing with related party transactions is available on the company's website at https://www.shardamotor.com/wp-content/uploads/2016/07/RPT-Policy.pdf.

Further, the transactions entered with the persons belonging to the promoter and promoter group of the company and holding 10 Percent or more shareholding in the company is provided in the Related Party Disclosures in relevant section of Notes to Financial Statements for the year ended March 31, 2024, forming part of this Annual Report.

We strive to attain high standards of corporate governance while dealing with all our stakeholders and have complied with all the mandatory requirements relating to Corporate Governance as stipulated in Para C of Schedule V of Listing Regulations. The "Report on Corporate Governance" forms an integral part of this report and is set out as a separate section to this annual report. A certificate from S. R. Dinodia & Co., LLP,

Chartered Accountants (Firm Registration No. 001478N/N500005), the Statutory Auditors of the Company, certifying compliance with the conditions of corporate governance stipulated in Para E of Schedule V of Listing Regulations is annexed with the report on corporate governance.

The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(2)(e) read with Para B of Schedule V of the Listing Regulations, is presented in a separate section forming part of this Annual Report.

The company has a vigil mechanism for directors and employees to report their genuine concerns. Vigil Mechanism / Whistle Blower Policy is available on the company's website at http://www. shardamotor.com/ wp-content/uploads/2021/08/ Whistle-Blower- Policy.pdf.

During the year under review, the company has not accepted any deposits from the public covered under chapter V of the Companies Act, 2013 and no amount was outstanding as on the date of Balance Sheet.

There were no material changes and commitments subsequent to close of the financial year which could affect the financial position of the company.

During the year under review, no material orders were passed by the Regulators, Courts or Tribunals which would impact the going concern status of the company and its operations in the future.

The Board of the company has constituted a Risk Management Committee to frame, implement, monitor and review the Risk Management plan and to ensure its effectiveness. The company has framed Risk Management Policy to identify the risks and place the procedures to mitigate the same. The Risk Management Committee of the Board periodically reviews the risks and suggests steps to be taken to control the risks. Details on the company's risk management framework, risk evaluation, risk identification, etc. is provided in the Management Discussion and Analysis Report forming part of this report.

The details regarding the constitution of the Risk Management Committee are provided in the Corporate Governance Report and the Risk Management Policy is available on the company's website at https:// www.shardamotor.com/wp-content/uploads/2021/07/Risk-Management-Policy-1.pdf. The said policy shall provide the shareholders with the understanding of Risk factors/parameters and its process of monitoring and mitigation.

The company values the dignity of individuals and strives to provide a safe and respectable work environment to all its employees. The company is committed to provide an environment, which is free of discrimination, intimidation and abuse. The company believes that it is the responsibility of the organisation to protect the dignity of its employees and also to avoid conflicts and disruptions in the work environment due to such cases.

The company has put in place a ‘Policy on redressal of Sexual Harassment at Work Place' as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("Sexual Harassment Act"). As per the policy, employees may report their complaint to the Internal Complaints Committee (ICC) at all the units, constituted with duly compliance under the Sexual Harassment Act.

During the year review, no complaint was received / filed by any person and no complaint is pending to be resolved as at the end of the year.

In pursuant to the Regulation 34(2)(f) of Listing Regulations, the company has prepared Business Responsibility and Sustainability Report detailing the various initiatives taken by the company on the environment, social, governance and various other factors, which form an integral part of Annual Report as Annexure VIII.

In terms of Section 134(3)(c) and (5) of the Act, it is hereby stated that: a) In the preparation of the annual accounts, the applicable accounting standards had been followed; b) Appropriate accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2024 and of the profit and loss of the company for the year ended on that date; c) Proper and sufficient care has been taken 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 annual accounts have been prepared on a going concern basis; e) Internal financial controls have been laid down to be followed by the company and that such internal financial controls are adequate and were operating effectively; f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis Report, which forms part of this annual report.

The applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors' and ‘General Meetings', respectively, have been duly followed by the company during the year under review.

Your company has been able to operate efficiently because of the professionalism, creativity, integrity and continuous improvement in all functional areas to ensure efficient utilisation of the company's resources for sustainable and profitable growth. The directors acknowledge their deep appreciation to employees at all levels for their dedication, hard work, commitment and collective team work, which has enabled the company to remain at the forefront of the industry despite increased competition and challenges.

Your directors take this opportunity to express their grateful appreciation for the excellent assistance and cooperation received from its Customers and also extend their appreciation to bankers, various departments of Central and State Government(s) and other stakeholders.

Statement containing salient features of the financial statement of subsidiaries / associate companies / joint ventures (Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014)

(Rs. in Lakhs except otherwise specified)

* includes JV

(Rs. in Lakhs except otherwise specified)

*Based on the audited financial statements as on March 31, 2023

**Based on the unaudited financial statement for the financial year 2023-24 as provided by Exhaust Technology Pvt. Limited.

1. There are no associate or joint venture which are yet to commence operations.

2. None of the associate or joint venture have been liquidated or sold during the year.

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014] To, The Members, Sharda Motor Industries Limited CIN: L74899DL1986PLC023202 D-188, Okhla Industrial Area Phase-I, New Delhi 110020

We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Sharda Motor Industries Limited (hereinafter referred as ‘the Company'). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

The Company's Management and Board of Directors are responsible for the maintenance of secretarial record under the Companies Act, 2013 and compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards. Further the Company's management and the Board of Directors are also responsible for establishing and maintaining adequate systems and process, commensurate with the size and operations of the Company to identify, monitor and ensure compliances with the applicable laws, rules, regulations and guidelines.

Our responsibility is only to examine and verify those compliances on a test basis and express an opinion on these secretarial records based on our audit.

We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company. Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

Due to the inherent limitations of an audit including internal, financial and operating controls, there is an unavoidable risk that some Misstatements or material non-compliances may not be detected, even though the audit is properly planned and performed in accordance with the Secretarial Auditing Standards as prescribed by Institute of Company Secretaries of India (ICSI).

Further, we conducted the secretarial audit by examining the secretarial records including minutes, documents, registers, other records and returns related to the applicable laws on the Company etc. made available to us. The management has confirmed that the records submitted to us are the true and correct. We have also relied upon representation given by the management of the Company for certain areas which otherwise requires physical verification.

We have followed the audit practices, secretarial auditing standards and processes as were applicable and appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification in some cases were done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion. We also believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Based on our verification of the Company's books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Company has during the audit period covering the financial year ended on March 31, 2024 complied with the statutory provisions listed hereunder and also that the Company has proper Board- processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31, 2024 according to the provisions of: (i) The Companies Act, 2013 (the Act) and the rules made thereunder; (ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA') and the rules made thereunder; (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (iv) The Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; (v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act'):-(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; (c) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015; (d) The Securities and Exchange Board of India ((Depositories and Participant) Regulations, 2018 (e) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018; Not Applicable (f) The Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021: Not Applicable (g) The Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021; - Not Applicable (h) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; Not applicable as the Company is not registered as Registrar to issue and Share Transfer Agent during the financial year under review.

(i) The Securities and Exchange Board of India (Delisting of Equity shares) Regulations, 2021; - Not Applicable

(j) The Securities and Exchange Board of India (Buy back of Securities) Regulations, 2018; - Not Applicable

(vi) The Company has identified following laws applicable specifically to the Company and we have relied upon the representation made by the Company and its officers for the system and mechanism framed by the Company for compliances made under following laws:

1. The Industrial (Development and Regulation) Act, 1951;

2. The Factories Act, 1948 & Central Rules or concerned State Rules, made thereunder;

3. The Environment (Protection) Act, 1986;

4. The Water (Prevention and Control of Pollution) Act, 1974 & Central Rules/concerned state rules;

5. The Air (Prevention and Control of Pollution) Act, 1981 & Central Rules/concerned state rules; We have also examined compliance with the applicable provisions of the following: (i) Secretarial Standards issued by The Institute of Company Secretaries of India.

(ii) The Listing Agreements entered into by the Company with BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).

Based on our examination and verification of records produced to us and according to the information and explanations given to us by the Company, in our opinion, during the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Standards and Guidelines etc. mentioned above. We further report that: The Board of Directors of the Company has been duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. Adequate notice(s) have been given to all directors to schedule the Board Meetings and Committee Meetings, agenda and detailed notes on agenda were sent at least seven days in advance and in case of shorter notice, compliance as required under the Act has been made by the Company and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

All decisions at Board Meetings and Committee Meetings have been carried out with requisite majority of the members of the Board or committees as the case may be. Further there is no case of views of the dissenting members as per the recordings in the minutes of the meetings of the Board or Committee(s) thereof.

We further report that there are adequate systems and process in the Company commensurate with the size and operations of the Company to monitor and ensure compliances with the applicable laws, rules, regulations and guidelines.

We further report that during the audit period the Company has the following specific event/action having major bearing on the Company's affairs in pursuance of the above referred laws, rules, regulations, standards & guidelines, if any, as may be referred to above;

1. The company has paid a final Dividend of Rs. 17.27 per equity share of Face Value of Rs. 2/- each for the Financial Year 2022-23.

2. The Board on 10th August, 2023 has made an amendment to the Joint Venture Agreement dated 25th February, 2019, executed between Sharda Motor Industries Limited and Purem International GmbH (earlier known as Eberspacher Exhaust Technology International GmbH) to bring clarity over JV products.

3. The company has transferred Rs. 17.39 lakhs for the unspent CSR obligation for the Financial Year 2020-21 to "Schedule VII Fund" on dated 29.04.2024. Further, the Company has deposited the unspent CSR obligation for the Current Year's ongoing projects in separate account amounting to Rs. 365.33 lakhs.

1. Brief outline on CSR Policy of the Company

The CSR Policy lays out a broader action plan aimed for social and economic welfare of the society in deed to comply with the CSR goals of the Company as provided under Schedule VII of the Companies Act, 2013 or as may be provided by the Ministry of Corporate Affairs / other Authority, from time to time. The Policy identifies that CSR programs / activities shall be carried out directly through their contribution or through CSR Philanthropic arm of the Company i.e., Sharda CSR Foundation Trust. The Policy also details out the procedure for Communication, reporting and Monitoring of CSR activities which takes place through the ongoing projects / other than ongoing projects.

2. Composition of CSR Committee:

3. Provide the web-link(s) where Composition of CSR Committee, CSR Policy and CSR Projects approved by the board are disclosed on the website of the company

CSR Committee - https://www.shardamotor.com/investor-relations/board-of-directors/ CSR Policy - https://www.shardamotor.com/wp-content/uploads/2016/07/Corporate-Social- Responsibility-Policy-1.pdf CSR Projects - https://www.shardamotor.com/about-us/csr-initiatives/

4. Provide the executive summary along with web-link(s) of Impact Assessment of CSR Projects carried out in pursuance of sub-rule (3) of rule 8, if applicable.

Not Applicable.

5. a) Average net profit of the company as per sub-section (5) of section 135.

Rs 20,212.78 lakhs b) Two percent of average net profit of the company as per sub-section (5) of section 135.

Rs. 404.26 lakhs c) Surplus arising out of the CSR Projects or programmes or activities of the previous financial years. Nil d) Amount required to be set-o_ for the financial year, if any.

Nil e) Total CSR obligation for the financial year [(b)+(c)-(d)].

Rs. 404.26 lakhs

6. a) Amount spent on CSR Projects (both Ongoing Project and other than Ongoing Project).

Rs. 38.93 lakhs b) Amount spent in Administrative Overheads.

Nil c) Amount spent on Impact Assessment, if applicable.

Nil d) Total amount spent for the Financial Year [(a)+(b)+(c)].

Rs. 38.93 lakhs e) CSR amount spent or unspent for the Financial Year:

7. Details of Unspent Corporate Social Responsibility amount for the preceding three Financial Years:

8. Whether any capital assets have been created or acquired through Corporate Social Responsibility amount spent in the Financial Year:

Yes No

If Yes, enter the number of Capital assets created/ acquired 1

(All the fields should be captured as appearing in the revenue record, flat no, house no, Municipal Office/Municipal Corporation/ Gram panchayat are to be specified and also the area of the immovable property as well as boundaries)

9. Specify the reason(s), if the company has failed to spend two per cent of the average net profit as per sub- section (5) of section 135

As certain major ongoing CSR projects began in financial year 2023-24, specially in the field of Health, Education and other fields as identified by the CSR committee of the company. The amount reserved for these projects will be spent in a phased manner. Therefore, unspent amount of Rs. 365.33 Lakhs pertaining to our ongoing projects has been transferred to unspent CSR account 2023-24.

1. The term ‘remuneration' has the meaning assigned to it under the Companies Act, 2013.

2. The nature of employment of Managing Director & Whole time Director is contractual, for the rest of the employees, it is other than contractual.

3. Shri Aashim Relan is the son of Shri Ajay Relan.

4. Except Shri Ajay Relan and Shri Aashim Relan, who are holding 58.42 Percent and 5.12 Percent equity shares of the Company respectively, none of the above employees holds more than 2 Percent of the equity share capital of the Company as on March 31, 2024 as per Rule 5(3)(viii) of the Companies (Appointment and Remuneration) Rules, 2014.

For the purpose of above calculation, Company has taken the comparable employees who were in the employment during the current year under review and the previous year and have excluded the employees not eligible for increment.

India comes in at the bottom of the global ranking, placing 176^th out of 180 countries with 27.6 points* in the 2024 Environmental Performance Index (EPI) among the most polluting countries. The Country ranks 155^th in the Air Quality issue categories with 55.3 points*. India is going through the most degraded phase in terms of pollution in all forms either it is air, water or soil pollution. Likewise, energy conservation offers a practical approach for reduction of greenhouse gasses. A socially responsible organisation always keeps track of its operations being environmentally e_icient. Your Company always strives to achieve the highest standards of energy conservation techniques by its continuous e_orts in the area of alternate source of energy and e_icient use of existing ones. Energy saving initiatives through the organisation in all the plants has helped the Company to reduce its cost of energy. Some of the key initiatives carried out during the year towards conservation of energy are mentioned hereunder:

Installation of automatic sensors for cutting o_ the electricity of electrical equipment's or heavy motors / machines when not in use / idle for few minutes at several Plants.

Maintenance of "Power Factor" to reduce consumption of electricity.

Installation of e_icient "Harmonic Panel" for reducing consumption of electricity. -

Replacement of bulbs with LED lights across the plants.

Installation of VFD drivers to save more power in machines and motors

Regular cleaning of Solar Panels to increase solar energy contribution.

Installation/Implementation of Robotic Cell as Automation drive effective utilization of energy

Replacement of electrical motor / other equipment's with latest energy e_icient equipment's with higher standards.- Yes its with Press shop 315 ton Yangli & 250 ton Press

Protoshop Timer shave been installed to cut the idle running of the machines.

Air Conservation system for Air Compressor.

Autostop timer for shop floor machines, exhaust fans, welding machines.

Installation of Solar Norikool Advance Day Light System in Nasik Plant.-

Installation of Solar Power Plant in SIPCOT Chennai (300KW) and 763KW in Chennai Mahindra World City.

Portable compress or provided for WCC cleaning purpose in place of high capacity compressor in Chennai plant.

2 Hydraulic Pump(10KW) eliminated by combining the hydraulic pump &operation in Chakan plant. Not implemented

Compressed Air Leakage reduced in plants

Heavy duty roof top exhaust fan idle time run has eliminated by providing timer

Clean and renewable energy sources are the need of the time. Fossil fuels are non-renewable and causing a great damage to the environment. We have to find more e_icient and feasible source of energy for our rapidly increasing demand of energy without arming the environment. Your Company has taken steps towards solar and wind energy in its plants

Solar Power plant have been initiated in the Nasik and Chakan plant.

Company is using Wind Power as its major power source in Chennai Plant.

Company has not made any substantial capital investment during the year 2023-24.

(i) The efforts made towards technology absorption;

Improved performance of exhaust system;

BSVI Advanced technology orientation through work shop and internship programmes;

Managing extended enterprises for quality supply for better warranty Management Emphasis on absorption of design and manufacturing technology such as controlled canning, micromig welding; Expansion and modernisation programme such robo welding uniform across plants.

(ii) The benefits derived like product improvement, cost reduction, product development or import substitution;

Import substitution and less dependence on technical collaborators;

Product line extension, introduction of mixing devise for UI improvement;

Improving fuel economy and consequent reduction in CO2 through low back pressure;

Improvement in core competencies and standardisation and correlation;

Significant improvement in meeting demand o_ end user.

(iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year)

No Technology has been imported during the last three years.

(iv) The expenditure incurred on Research and Development (Rs. in Lakhs)

Capital Expenditure–Rs. 104.60.

Revenue Expenditure–Rs. 443.84

The Foreign Exchange earned in terms of actual inflows during the year and the foreign exchange outgo during the year in terms of actual outflows. The information is reported under suitable heading in the ‘Notes to Financial Statement' forming part of the Annual Report of the Company for the financial year 2023-24.

Source: *Environmental Performance Index 2024

(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014)

1. Details of contracts or arrangements or transactions not at arm's length basis:

There were no contracts or arrangements or transactions entered into during the year ended March 31, 2024, which were not at arm's length basis.

2. Details of material contracts or arrangement or transactions at arm's length basis: