Sundaram Clayton Ltd

TO THE SHAREHOLDERS

The Directors have the pleasure of presenting the 7th Annual Report and the audited accounts of the Company for the year ended 31st March 2024.

COMPOSITE SCHEME OF ARRANGEMENT

Hon'ble National Company Law Tribunal, Chennai Bench ("NCLT") vide its Order dated 6th March 2023 sanctioned the Composite Scheme of Arrangement ("Scheme") amongst the Company and TVS Holdings Limited (formerly Sundaram-Clayton Limited) ("Demerged Company") and TVS Holdings Private Limited and VS Investments Private Limited and their respective shareholders and creditors. In accordance with the Scheme, the entire business of manufacturing non-ferrous gravity and pressure die castings of TVS Holdings Limited ("Demerged Undertaking" as defined in the Scheme) was demerged, transferred and vested into the Company effective 11th August 2023 on a going concern basis ("Demerger").

CHANGE IN NAME OF THE COMPANY

In terms of the Scheme, upon the effectiveness of Demerger, the name of the Company viz., "Sundaram-Clayton DCD Limited" was changed to "Sundaram-Clayton Limited" and the same was approved by the Registrar of Companies on 30th August 2023.

Pre-Scheme Capital Structure of the Company:

Prior to the Scheme, the Authorised Share Capital and the issued, subscribed and paid-up capital was Rs.25,000/- (Rupees Twenty- Five Thousand) divided into 2,500 (Two-thousand Five hundred) equity shares of Rs.10/- each.

Post-Scheme Capital Structure of the Company:

In terms of the Scheme, upon the effectiveness of Demerger, the entire pre-scheme paid-up share capital of the Company comprising 2,500 Equity Shares of Rs.10/- each as held by Demerged Company shall stand cancelled.

Increase in authorised Share Capital

In terms of the Scheme, the capital clause of the Memorandum of Association and Articles of Association of the Company was amended, without any act, replaced with Rs.15,00,00,000 (Rupees Fifteen Crore) divided into 2,50,00,000 (Two Crore and Fifty Lakhs) equity shares of Rs.5 (Rupee Five) each and 25,00,000 (Twenty-Five Lakhs) Preference Shares of Rs.10 (Rupee Ten each).

Further, as consideration for the said Demerger in terms of the Scheme and as per the Share Entitlement Ratio, the Scheme Implementation Committee of the Company at their meeting held on 31st August 2023, approved the allotment of 2,02,32,104 fully paid-up equity shares of Rs.5 each and 8,73,032 fully paid-up Preference Shares of Rs.10/- each.

LISTING OF EQUITY SHARES

The Equity Shares of the Company were listed and admitted to the dealings on the Stock Exchanges viz., BSE Limited ("BSE") and National Stock Exchange of India Limited ("NSE") on 29th December 2023.

NON-CONVERTIBLE DEBENTURES

The Demerged Company had issued and allotted 1,000 unsecured, redeemable, Non-Convertible Debentures ("NCD") of face value of Rs.10 Lakhs each on 18th August 2020 aggregating to Rs.100 Crores at 7.65% p.a. and redeemable in equal instalments at the end of 4th year and 5th year. The NCDs were listed with NSE on 25th August 2020.

Pursuant to Part V of the Scheme i.e., upon transfer, vesting of the Demerged Undertaking with the Company, the said NCDs were transferred to the Company effective 11th August 2023 and re-listed on NSE effective 11th November 2023.

2. FINANCIAL HIGHLIGHTS

3. DIVIDEND

The Board of Directors of the Company (the Board) at their meeting held on 26th March 2024, declared an interim dividend of Rs.5.15/- per share (103%) on 2,02,32,104 equity shares of Rs.5/- each for the year 2023-24 involving an outgo of Rs.10.42 Cr. The same was paid to the members on 18th April 2024.

The Board does not recommend any further dividend for the year under consideration. The dividend pay-out is in accordance with the Company's Dividend Distribution Policy.

The Board is not considering any transfer of amount to General Reserves for the year under review, as it is not mandatorily required.

Indian economy:

India's real Gross Domestic Product (GDP) is estimated to have grown by 7.6% in FY24 as against a growth of 7.2% in FY23 on the back of buoyant domestic demand. Headline inflation softened to 5.49% in FY24, from 6.70% in FY23.

According to the World Bank, the World economies' GDP grew at 2.6% in 2023 against the growth rate of 3.0% in 2022.

US economy:

The US recorded GDP growth of 2.5% in 2023 compared to the growth of 1.9% in 2022. Despite high interest rates, retail spends remained strong during the year, inflation went down from 8.0% in 2022 to 3.4% 2023.

EU economy:

The GDP growth in Europe (EU27) slowed from a 3.4% in 2022 to 0.4% in 2023. The slowdown was more pronounced in the second half of the year. Consumer expenditure expanded only slightly, as consumers were reluctant to spend more in the face of high inflation, high interest rates and economic uncertainty. Yet, the robust labour market prevented a greater slowdown.

Company's Performance:

The Company posted its significant growth both in turnover and profit terms during the year by focusing on making systemic improvements across the organization, by improving productivity & quality and by delivering the products to the customer on-time. This is despite the adverse macro-economic factors, supply chain disruptions due to conflicts in Red Sea and the Middle East.

The following table highlights the performance of SCL India during FY 2023-24:

The revenue of the Company is derived from Medium & Heavy Commercial Vehicles (MHCV) segment (62%), followed by Twowheeler segment (19%) and the Passenger Vehicle segment (19%).

I. INDUSTRY STRUCTURE AND DEVELOPMENT India:

The segment wise performance in the Indian automotive industry (Domestic sales + Exports) was as below.

(Figures in ‘000 nos)

(Source: SIAM+DICVinternal estimate)

On the backdrop of a robust economic growth of 7.6% based on conducive policies of Government of India, the Indian Automobile Industry has posted a satisfactory performance.

The two-wheeler (2W) segment experienced approximately 10% growth, driven by increased model availability, the introduction of new products, and a positive market sentiment. This growth occurred alongside the burgeoning electric vehicle (EV) market and strategic launches in the premium segment.

The passenger vehicle (PV) segment grew by 7.4% reaching an all-time high. This was fuelled by enhanced vehicle availability, an attractive model mix, and substantial contributions from the SUV segment, which now commands a 50% market share.

Demonstrating adaptability to market dynamics, medium and heavy commercial vehicle (MHCV) segment witnessed a growth of approximately 4%. This was facilitated by improved vehicle supply, as well as notable purchases stimulated by government's thrust on building infrastructure.

Moreover, the year underscored the industry's commitment to sustainability as it began manufacturing vehicles compliant with 20% Ethanol. Notably, there was a remarkable growth of 90% in Electric Passenger Vehicles and 30% in Electric Two-Wheelers.

North America & EU

The following table highlights the North American and European truck registration figures in vehicle units:

(Source: FTR & ACEA)

North America: The Class 8 trucks sales were flat in 2023-24, high inflation and interest rates were major threats to the Class 8 truck demand. Their sales defied the recession fears fleet replacement, strong consumer spending and stable freight rates and registered a flat growth of 1% in 2023-24 on a high base of last year.

EU: In the EU markets, heavy commercial vehicles (>16 Ton category) registered a decent growth of approx. 10% in FY 202324 compared to FY 2022-23. Within the region's largest markets, only Poland remained in negative territory (-8%), while all the other high-volume EU markets for heavy trucks recorded growth in FY 2023-24: Germany (+17%), Spain (+9%), Italy (+9%) and France (+7%).

II. BUSINESS OUTLOOK AND OVERVIEW

The business environment is expected to be challenging in export markets and healthy in India during FY 2024-25. The Company is optimistic about its future considering the following scenario in all major markets that are of interest to the Company.

India:

In the Budget 2024-25, the Government has increased the outlay for capital expenditure (capex) on infrastructure sector by 11% from Rs.10 lakh crore to Rs.11.11 lakh crore. Current Account Deficit (CAD) is expected to decrease to below 1% of gross domestic product (GDP) in FY24. This reduction is due to well managed goods trade deficit, enhanced net services receipts, rising remittances, and overall macroeconomic stability. In FY25, inflation is expected to be within the comfort range of RBI and GDP growth rate is expected to be in the range of 6.5% to 7.5%.

In the medium term, there are various initiatives in place to continue India's growth momentum. Production Linked Incentives for Automotive & Auto Component sector and other sectors are expected to strengthen the manufacturing sector in India, special focus on setting up semiconductor manufacturing in India are going to be major drivers for Auto industry's growth.

In FY25, the sales of Passenger Vehicle and MHCV segments in India are expected to register around 6% and 11% growth respectively and the sales of Two-wheelers are expected to grow by around 10%.

Global scenario:

Global growth is set to slow further in 2024 amid tight monetary policy, restrictive financial conditions, and feeble global trade and investment.

Global GDP growth rate is expected to decelerate to 2.4% in 2024 from 2.6% in 2023, due to geopolitical strife and Red Sea issue in the Middle East along with elevated central bank policy rates to fight inflation, withdrawal of fiscal support amid high debt weighing on economic activity, and low underlying productivity growth.

Downside risks include further escalation of the recent conflict in the Middle East, financial stress, persistent inflation, trade fragmentation, and climate-related disasters.

North America:

In 2024, the U.S. economy is expected to maintain the GDP growth rate of around 2.1% to 2.5%, like the growth rate of 2023. The Fed interest rate remained the same at 5.4% throughout 2023 and are estimated to go down to 4.6% to 4.0% in 2024 as inflation eases. The U.S. Class 8 truck market volumes are expected to degrow by 10% to 15% in FY 2025.

EU:

Europe's economy has struggled to regain momentum following the pandemic, hamstrung by high inflation and rapid interest rate hikes to combat it. A surge in energy prices in 2022 triggered by Russia's full-scale war on Ukraine early that year was particularly painful and natural gas prices remain high in Europe.

Europe's biggest economy, Germany, is languishing as its output shrank last year for the first time since the onset of the pandemic. The sales of EU heavy commercial vehicles (>16 Ton category) in FY 2025 are expected to drop by 10% to 15%.

To summarize the export market outlook, the truck industry in the US and the EU is expected to drop in FY25.

III. Opportunities & Threats

The Company supplies aluminium castings for commercial vehicles, passenger cars and two-wheeler segments of the automotive industry.

In the long term, technology changes such as stringent emission norms, fuel economy regulations, adoption of alternate drivetrain technologies, etc., are the major challenges the industry needs to tackle. Global truck manufacturers are already offering zero emission vehicles in the US and the EU. However, the thrust towards light-weighting and zero emission vehicles is bound to increase leading to higher content of aluminium in all vehicle types. This shift to zero emission vehicles provides increased growth opportunities to the Company and it is well placed to leverage these emerging opportunities, being a preferred source for aluminium castings to major OEMs in India, the US and the EU.

Many companies are expected to move out of China, which is a major source of supplies for automotive parts. This is expected to provide additional growth opportunities to the Company.

OEMs are estimating carbon footprint in every leg of their supply chain to move towards net zero emissions and would eventually reorganize their global purchasing strategies, which could result in a strong push for localization to cut down their carbon footprint. The threat to business from this potential change in sourcing policy is mitigated as the Company has already set up a manufacturing in the US. The Company is closely monitoring these developments and will act to capitalize on business opportunities to ensure continued growth. The Company is also taking various green initiatives across its manufacturing sites and working to use more renewable energy in its manufacturing processes as part of its sustainability measures. For example, the Thervoy Kandigai plant is expected to use 80% of its total energy needs through renewable sources.

Several Indian die casting companies and OEMs have set up or have been setting up new capacities over the past few years. The Company will be continuing its actions to secure new businesses to ensure better utilization of assets despite the increased competition and cost.

Intense competition makes it extremely difficult to seek price increases to compensate the effects of inflation bringing the margins under severe pressure. However, the Company's supply contracts provide for periodic price adjustments indexed to the domestic and international prices of aluminium and this should offer some protection against volatility of commodity prices. The Company is practicing strong cost reduction initiatives including VA/VE to mitigate the margin pressures.

Macroeconomic risks

There are several possible risks on the horizon, around 70 countries will have elections and 55% of world population will see votes, any post-election policy changes in those countries can have impact on global trade relations. Other geopolitical tensions like wider war within Middle East region due to Israel-Palestine conflict and Russia- Ukraine war may disrupt global stability and impact crude oil prices, freight rates, commodity prices, global trade, and investor confidence. India faces risks from food supply shocks due to adverse weather or distribution disruptions, affecting inflation and economic stability. Despite these risks, India's economy has been resilient, with robust GDP growth and positive sentiment.

Industry and Company specific risks

The truck sales in the US and the EU are expected to witness significant drop in FY 2025.

In India, increase in manufacturing activity, steady agricultural output, and the government's increased spending on infrastructure are all expected to drive the demand. Lack of monsoons could lower the GDP.

Significant unfavourable movement in prices of key raw material, aluminium, in global markets is one key factor that can affect the profit margins of the Company. Increase in power tariff domestically can impact financial performance in FY25. The management is continuously monitoring the costs of raw material & logistics and taking appropriate cost reduction measures or contract price negotiations to maintain and improve the profit margins.

Shifting the operations to the new plant at Thervoy Kandigai SIPCOT could lead to increased costs initially both for inventory building as well as operating costs, but once the plant stabilizes, the risk will be mitigated.

Forex

With significant exports, import of raw materials and capital goods, the Company is always exposed to impact on account of currency fluctuations. However, the Company has a well-defined forex hedging policy to mitigate the risks.

Contractual

The stipulation and requirements of the automobile industry demands high quality products. Robust quality management systems meeting international standards like IATF 16949 are in place to ensure excellent product quality. Additionally, the Company has also taken appropriate recall and product liability insurance in line with standard industry practice.

Just-in-time delivery is another important contractual obligation. Robust quality and project management systems are in place to avoid delay in deliveries due to quality issues or project implementation.

Capacity utilization

The Company adds capacity as required, in existing and new locations, to meet the projected demand of customers. The Company closely monitors the progress of customer projects/volumes and appropriately deploys the assets to protect from both underutilization and capacity shortages to meet the demand.

Risk Management Policy

The Board has established a Risk Management Policy which formalizes the Company's approach to overview and manage material business risks. The policy is implemented through a top down and bottom-up approach for identifying, assessing, monitoring and managing key risks across the Company's business units.

Risks and effectiveness of their management are internally reviewed and reported regularly to the Board. The Management has reported to the Board that the Company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

The Board is satisfied that there are adequate systems and procedures in place to identify, assess, monitor and manage risks. The Audit Committee also reviews reports by members of the management team and recommends suitable action. Risk Mitigation Policy has been approved by the Board.

V. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Board is accountable for evaluating and approving the effectiveness of the internal controls, including financial, operational and compliance. The Company has a proper and adequate internal control system to ensure that all the assets of the Company are safeguarded and protected against any loss and that all the transactions are properly authorized and recorded. Information provided to management is reliable and timely and statutory obligations are adhered to.

Company is strengthening the controls by leveraging technology and centralizing processes, enhancing monitoring, and maintaining effective tax and treasury strategies. The Audit Committee continues to monitor the effectiveness of internal control using new technologies that impact the financial controls and reporting enterprise risk.

Internal Financial Controls

The Company has an established Internal Financial Control framework including internal controls over financial reporting, operating controls, and anti-fraud framework. The framework is reviewed regularly by the management and tested by internal audit team and presented to the audit committee.

Based on periodical testing, the framework is strengthened, from time to time, to ensure adequacy and effectiveness of Internal Financial Controls.

A. Manufacturing

The Company has been using Total Quality Management (TQM) as the foundation of its management. The Company implemented the best practices like Total Productivity Management (TPM) and Lean Manufacturing (TPS) in its manufacturing facilities. During FY24, the Company continued working with mentors to improve its systems and processes. Significant aspect of the same is to synchronize our operations with customer demand. This will bring in better planning and execution system along with control over inventories in the pipeline. It also has in place best-in-class practices for safety, pollution control, work environment, water and energy conservation.

Continuous improvement projects are implemented for betterment of the product quality and operational efficiency in all the manufacturing locations. Re-energizing TPM practices helped in improving the equipment reliability and consequently plant Overall Equipment Effectiveness (OEE). The Company has also initiated various projects towards deploying Industry 4.0 practices through connected machines. This will be scaled up in the coming years and is expected to bring significant gains in operational efficiencies across manufacturing locations.

The Company's journey of achieving manufacturing excellence was recognized and rewarded by the following customers during FY24.

• Ford - Awarded for "Launch Quality and supply of the Panther ladder frame" program

• VECV - Received "Outstanding Contribution in Cost & Capacity Excellence"

• Hanon - Received "Best project award" during their problemsolving completion

• DICV - Won "Runner up (Second)" position during Kaizania event in Nov-23

• HMIL - Won "Best performance award for ESG"

• DAF - Received the "Leader Award"

In line with the Company's vision, work is being done on developing several futuristic technologies that will bring value to the customer.

B. Quality

Achieving customer delight by consistently providing products of excellent quality is the prime motto of the Company. This is achieved through state-of-art technology, training, effective quality system, continuous improvement, and total employee involvement.

Poka-yokes, process audits, use of statistical tools for process optimization and online process controls also contribute towards improving and achieving consistency in product quality. During the year special focus has been given on advanced statistical methods and widespread use of Taguchi DOE methodology to further improve the product quality. The quality system is certified for IATF 16949 requirements.

TQM is a way of life in the Company. 100% employee involvement has been successfully achieved for many years.

Employees have completed 314 projects by applying statistical tools through Quality Control Circles (QCC) in FY24. The average number of suggestions implemented per employee was 45.

C. Cost management

Cost management is a continuous journey, and the Company manages the same through rigorous deployment, monitoring, and control of costs across all departments. Cross functional teams are working on projects focussed on Value Added / Value Engineering (VA/VE) and improving operational efficiency. TPM and Lean initiatives are deployed Company-wide to achieve reduction in manufacturing cost. Given the cost pressures due to the current inflationary pressures, significant cross functional team working ensured mutual cross learning and fast horizontal deployment of ideas/projects across our manufacturing locations.

D. Information Technology

The Company uses ERP system that integrates all business processes across the Company. Suppliers and customers are also integrated into the system for better planning and execution. During FY24, IT road map for organization was laid out and deployment of Industry 4.0 projects was initiated to monitor, control and improve manufacturing processes and quality. The Industry 4.0 projects have progressed as per plan and selected cells in all the factories are connected. The Company continues to improve the cyber security controls and mechanisms and plans to go for ISO 27001 certification that would place the Company amongst the leaders in the auto component industry. As we move towards digitalization of our processes and systems, special focus is being given to enhance the Information Security of our networks with a special emphasis on cyber security aspects. These digitalization measures across various functions will ensure all the processes and systems are optimised and aligned to deliver customer delight.

VII. KEY FINANCIAL RATIOS

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor

* from 11th August 2023 to 31st March 2024

VIII.HUMAN RESOURCE DEVELOPMENT

The Company considers employees as vital and most valuable assets. Human Resource Development (HRD) is aligned to business needs to enhance business performance and results. HRD is practiced through an overall HRD framework with its constituents as resourcing, employee engagement, performance & compensation management, competency- based development, career & succession planning and organization development. Each of these constituents has a structured approach and process to deliver. The information on the number of persons employed have been provided in Business Responsibility and Sustainability Report (BRSR) (Annexure V)

As a part of the long-term strategy of the Company, collaborative education program has been initiated with three reputed institutes to develop role-ready engineers with Company-specific knowledge at the entry level. The Company also revamped and launched the yellow belt and green belt programs during the year along with various other systems-oriented training programs. This is expected to not only help solve chronic problems faced on the shop floor but also help in building the competency of our engineers in structured problem solving.

Career development workshop is conducted to identify high potential employees. Such employees are groomed for taking up higher responsibilities. A reward and recognition systems are in place to motivate and also provide fast track growth for the high potential employees.

Our engineers and executives are sponsored for advanced study offered by both Indian and foreign institutions. Customized technical and leadership competency improvement programs are developed and delivered through reputed institutions.

The Company continuously measures and reports employee engagement every year and identifies improvement areas to work on.

An excellent industrial relations environment continues to prevail at all the manufacturing units of the Company.

IX. ENVIRONMENT, HEALTH & SAFETY

The Company is fully committed towards employee safety. Safety management is integrated with the overall Environment, Health and Safety (EHS).

The Company has been certified under Integrated Management System (IMS) combining ISO 14001 and ISO 45001 systems and procedures.

The Company is working on its Sustainability roadmap by engaging with a reputed external agency. The Company has already mapped the carbon footprint of its Indian operations and is now working on detailed roadmap with actions to achieve carbon neutrality.

X. CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Company's objectives, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include, amongst others, economic conditions affecting demand / supply and price conditions in the domestic and overseas market in which the Company operates, changes in the Government Regulations, Tax Laws and Other Statutes and Incidental Factors.

7. DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013, ("the Act, 2013") with respect to Directors' Responsibility Statement, it is hereby stated that-

i. in the preparation of annual accounts for the financial year ended 31st March 2024, the applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any;

ii. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review;

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

iv. the Directors had prepared the accounts for the financial year ended 31st March 2024 on a "going concern basis";

v. the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

8. CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the financial year 2022-23, the Company did not have any operations, and hence, the requirement for contribution towards the Corporate Social Responsibility ("CSR") activities were not applicable. However, consequent to the Demerger, contributions will be aligned with the profits generated during the financial year 2023-24 and also committed to actively participating in CSR endeavours.

As per the provisions of Section 135 of the Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors constituted a Corporate Social Responsibility (CSR) Committee and also formulated and recommended a CSR Policy along with a list of projects/programmes to be undertaken for CSR spending by Srinivasan Services Trust ("SST") and other eligible Trusts, which are falling within the CSR activities as specified under Schedule VII to the Act, 2013.

This commitment underscores our dedication to ethical and sustainable practices, as well as our responsibility towards society and the environment. It may also be noted that the CSR Committee has approved the projects or programmes to be undertaken by the SST and other eligible trusts for the year 2024-25, preferably in local areas including the manner of execution, modalities of utilisation of funds and implementation schedules and also monitoring and reporting mechanism for the projects or programmes, as required under the Companies (Amendment) Act, 2020.

Committed to social responsibility, the Company works to drive positive change in rural communities through the Srinivasan Services Trust ("SST"). SST prioritizes health, education, environmental wellbeing, and economic empowerment in these areas. The core approach centres around total community involvement, ensuring all stakeholders participate and that projects are sustainable in the long run. SST fosters integrated, holistic, and participatory village development, working together with both communities and the Government. This collaborative approach ensures sustainable progress in the villages supported. Over the past 28 years, SST has empowered over 60,000 women by organizing them into Self Help Groups (SHGs).

Furthermore, SST has implemented over 350 water conservation projects, including desilting tanks and irrigation channels, and has repaired and renovated over 2,600 pieces of rural government infrastructure. Looking ahead, SST is committed to continuous improvement.

In the last few years SST has stitched partnerships with several NGOs and Foundations to work on specific areas of water, health and hygiene, capacity building of SHGs, quality education and livelihoods through effective livestock management and entrepreneurship.

SST has won the following awards in FY 2024:

• Best CSR and Sustainability Practices Award 2022-23 (awarded in 2023-24) by Asian Centre for Corporate governance and Sustainability.

• Economic Times Human Capital Awards 2023 - Winner (Gold) in Change Management

• CSR Journal Excellence Award 2023 - Special commendation for Water Conservation work in Tiruvannamalai.

• Maharashtra CSR Awards 2023 by India CSR - for Silage: Livestock Development

• CII National HR Circle Award for Best practices - Winners in 2 Platinum in Change Management & Digitization.

• NHRD 12th Showcase Best Corporate HR Practice - Runnersup.

9. FINANCIAL PERFORMANCE & POSITION OF SUBSIDIARIES & ASSOCIATES

During the year under review, Part V of the Scheme which provides for the demerger, transfer and vesting of the Demerged Undertaking with the Company was effective 11th August 2023.

Pursuant to the said Demerger under the Scheme, the following subsidiaries and associate were transferred to the Company, which forms part of the Demerged Undertaking:

Sr. No Name of the Companies

Subsidiaries

1. Sundaram Holding USA Inc., USA ("SHUI") and its Limited Liability Corporations:

- Green Hills Land Holding LLC, South Carolina, USA

- Component Equipment Leasing LLC, South Carolina, USA

- Sundaram-Clayton USA LLC, South Carolina, US

- Premier Land Holding LLC, South Carolina, USA

2. Sundaram-Clayton (USA) Limited, USA

3. Sundaram-Clayton GmbH, Germany

Associate:

4. Sundram Non-Conventional Energy Systems Limited

Sundaram Holding USA Inc., USA (SHUI) & its subsidiaries

Sundaram Holding USA Inc., USA (SHUI), a company established under the applicable provisions of Laws of The United States of America.

SHUI's wholly owned subsidiaries are:

- Green Hills Land Holding LLC, South Carolina, USA

- Component Equipment Leasing LLC, South Carolina, USA

- Sundaram-Clayton USA LLC, South Carolina, USA

- Premier Land Holding LLC, South Carolina, USA

SHUI is in the business of manufacturing and selling aluminium die cast products to existing customers and Global Commercial Vehicle manufacturers. SHUI was set up to leverage existing customer relationships and capture additional business opportunities due to customer preferences for near shore sourcing and Government regulation. It would also help to reduce the carbon footprint across the supply chain and meet the upcoming net zero emission goals of customers.

Based on the confirmed orders placed by North American customers on SHUI for the next 3 years, nearly 100% of current annual capacity of 10,000 MT at SHUI was booked. SHUI is ramping up production to meet these orders and the Company will evaluate the capacity expansion plans in due course and optimize the capital allocation between the Company and SHUI.

During the period 2023-24, SHUI's income was Rs.108.70 crore from Rs.112.81 crore during FY23. The Profit/(loss) Before Tax was at Rs.(184.27) crore as against Rs.(182.35) crore during the previous year.

Sundaram-Clayton (USA) Limited

Sundaram-Clayton (USA) Limited, a wholly-owned subsidiary of the Company is engaged in the business of providing Professional Employer Organisation ("PEO") services to the employees of the Company.

Sundaram-Clayton GmbH, Germany (SCL GmbH)

Sundaram-Clayton GmbH (SCL GmbH), a wholly-owned subsidiary of the Company is yet to commence its operations. SCL GmbH is incorporated with the objective of establishing an engineering design centre.

10. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129 of the Act, 2013 read with the Companies (Accounts) Rules, 2014 and Regulation 33 of Listing Regulations along with a separate statement containing the salient features of the financial performance of subsidiaries / associates, in the prescribed form. The audited consolidated financial statements together with Auditors' Report forms part of the Annual Report.

The financial statements of the subsidiary companies will be made available to the Shareholders, on receipt of a request from any Shareholder and it has also been placed on the website of the Company. This will also be available for inspection by the Shareholders at the Registered Office during the business hours as mentioned in the Notice of AGM.

The consolidated Profit / (loss) Before Tax of the Company and its subsidiaries & associates amounted to Rs.(97.37) Cr for the period from 11th August 2023 to 31st March 2024.

Special Recognition to Mr Venu Srinivasan, Chairman Emeritus & Managing Director

During the year under review, Mr Venu Srinivasan, was conferred with an "Outstanding Institution Builder" Award at the 13th Managing India Awards - recognizing his exceptional vision and leadership in building an organization and who has been the driving force of an organization.

Mr Venu Srinivasan also received the "Lifetime Achievement Award" at the EY Entrepreneur of the Year 2023 in recognition of his visionary leadership and for his decades of entrepreneurial excellence in revolutionizing the two-wheeler industry in India.

Directors' appointment / re-appointment

The shareholders at the 6th Annual General Meeting held on 24th July 2023, approved the appointment of Mr Venu Srinivasan, Dr. Lakshmi Venu, Mr Rajesh Narasimhan and Mr Vivek S Joshi as Directors of the Company. Further, Mr R Gopalan was appointed as Chairman of the Company effective 9th August 2023.

During the year under review the following appointments / re-appointments of Directors were made:

NRC had carried out evaluation of the appointed Directors before the appointment on various parameters viz., integrity, qualification, expertise, experience and it has satisfied itself with the positive attributes of the Directors in accordance with the Nomination and Remuneration (NR) Policy read with the provisions of Section 178 of the Act, 2013 and the Listing Regulations.

In terms of Section 152 of the Act, 2013, Mr Venu Srinivasan and Dr. Lakshmi Venu, Directors of the Company, are liable to retire by rotation at the ensuing Annual General Meeting ("AGM") and, being eligible, offer themselves for re-appointment. The Board recommends the same for the approval of shareholders. Brief resume of the Directors are furnished in the Notice convening the AGM of the Company.

Independent Directors (IDs)

All IDs hold office for a fixed term of five years and are not liable to retire by rotation.

As at 31st March 2024, M/s C R Dua, R Gopalan and Sasikala Varadachari are the Independent Directors of the Company.

The terms of appointment of IDs include the remuneration payable to them by way of fees and profit related commission, if any.

The terms of IDs cover, inter-alia, duties, rights of access to information, disclosure of their interest / concern, dealing in Company's shares, remuneration and expenses, insurance and indemnity. The IDs are provided with copies of the Company's policies and charters of various Committees of the Board.

In accordance with Section 149(7) of the Act, 2013, all IDs have declared that they met the criteria of independence as provided under Section 149(6) of the Act, 2013 and Regulation 25 of the Listing Regulations and the Board confirms that they are independent of the management.

The detailed terms of appointment of IDs are disclosed on the Company's website in the link as provided in page no. 80 of this Annual Report.

All the IDs have registered with the databank of Independent Directors developed by the Indian Institute of Corporate Affairs in accordance with the provisions of Section 150 of the Companies Act, 2013 and obtained ID registration certificate and renewed the same for five years / life time, as the case may be.

Separate meeting of Independent Directors

During the year under review, a separate meeting of IDs was held on 11th March 2024. All the IDs were present at the meeting and Mr R Gopalan was the lead Independent Director.

Based on the set of questionnaires, complete feedback on NonIndependent Directors and details of various activities undertaken by the Company were provided to IDs to facilitate their review / evaluation.

IDs used various criteria prescribed by the Nomination and Remuneration Committee (NRC) for evaluation of Non-IDs and Executive Directors viz., M/s. Venu Srinivasan, Dr. Lakshmi Venu and Vivek S Joshi and Non-IDs viz., M/s. Rajesh Narasimhan and R Anandakrishnan and also of Chairman of the Board and the Board as a whole, for the year 2023-24.

(a) Non-Independent Directors (Non-IDs)

IDs evaluated the performance of all Non-IDs individually, through a set of questionnaires. They reviewed the developing strategic plans aligned with the vision and mission of the Company, displaying leadership qualities for seizing the opportunities and priorities, developing and executing business plans aware of the risks involved, establishing an effective organizational structure, and demonstrating high ethical standards and integrity and commitment to the organization besides participation at the Board / Committee meetings, effective deployment of knowledge and expertise and constructive comments/ guidance provided to management by the Non-IDs.

They have also noted the milestones achieved by the Company during the year under review. IDs appreciated and recorded that -

Mr Venu Srinivasan has played a crucial role in transforming the Company into a global quality leader over the last four decades. His commitment to excellence and adoption of a positive work culture have helped the Company surpass global standards.

His leadership skills have enabled the Company to capitalize on available opportunities, leading to substantial growth and his extensive experience allows him to execute business plans while being mindful of associated risks. He has paved the way for a capable successor, ensuring the company's continued expansion.

Dr. Lakshmi Venu demonstrates the highest level of integrity and consistently contributes valuable insights and alternative viewpoints. She effectively oversees internal controls and risk management systems within the Company. She fosters open and interactive discussions by encouraging diverse viewpoints.

Dr. Lakshmi Venu played critical role in the Company's success, contributing unique strengths to its growth and development and to improve profitability.

Mr. Vivek S Joshi, Director and Chief Executive Officer with his efforts and commitment helped the Company to satisfy customer needs.

His strategic planning, focus on quality, passion for customers and eye for technology helped in shaping the Company's journey of becoming a manufacturer boasting superior quality products.

IDs were satisfied fully with the performance of all Non-IDs.

(b) Chairman

The IDs reviewed the performance of Chairman of the Board. The IDs placed on record their appreciation of Chairman's high level of integrity & objectivity and judicious approach, and brings his vast experience, helps to steer Board discussions and decisions for the benefit of the Company and Shareholders.

(c) Board

IDs also evaluated Board's composition, size, mix of skills and experience, its meeting sequence, effectiveness of discussion, decision making, follow up action, so as to improve governance and enhance personal effectiveness of Directors.

The evaluation process focused on Board Dynamics. The Company has a Board with a wide range of expertise in all aspects of business and outstanding diversity of the Board with the presence of varied personalities with an expert in each domain viz., Engineering, Finance, Marketing, Legal, Information Technology, Administration and International trades and is well balanced with the addition of directors, with domestic and international experience and also from new industries.

The Company's management is well guided by the Non- Executive Directors and Board benchmarks well in terms of its overall composition and the value it adds to the business.

As far as shareholders' interest is concerned, IDs noted that a proper system has been established to ensure that the Company is prompt, relevant and transparent.

They were satisfied with the Company's performance in all fronts and finally concluded that the Board operates with best practices. Board composition of the Company is in compliance with the SEBI Listing Regulations.

(d) Quality, Quantity and Timeliness of flow of Information between the Company, Management and the Board

All IDs have expressed their overall satisfaction with the support received from the management and the excellent work done by the management during the year under review and also that the relationship between the top management and Board is smooth and seamless.

The Company is in compliance with the statutory requirements under both the Companies Act and the Listing Regulations and all the information provided to the Directors are very wholesome.

The information provided for the meetings were clear, concise and comprehensive to facilitate detailed discussions and periodic external presentations on specific areas well supplemented the management inputs. The emerging e-technology was duly incorporated in the overall review of the Board.

KEY MANAGERIAL PERSONNEL (KMP)

During the year under review, Mr Ajay Kumar was appointed as the Chief Financial Officer and Mr P D Dev Kishan was appointed as the Company Secretary and Compliance Officer of the Company with effect from 11th August 2023.

Mr Venu Srinivasan, Chairman Emeritus & Managing Director, Dr. Lakshmi Venu, Managing Director, Mr Vivek S Joshi, Director and Chief Executive Officer, Mr Ajay Kumar, Chief Financial Officer and Mr P D Dev Kishan, Company Secretary are the ‘Key Managerial Personnel' of the Company in terms of Section 2(51) read with Section 203 of the Act, 2013 as on date of this Report.

Nomination and Remuneration Policy

The Nomination and Remuneration Committee of Directors (NRC) reviews the composition of the Board to ensure an appropriate mix of abilities, experience and diversity to serve the interests of all stakeholders of the Company.

Nomination and Remuneration Policy was approved by the Board at its meeting held on 11th August 2023 and will be reviewed from time- to-time to maintain consistency and statutory amendments to be reflected in the policies to make it upto date and more comprehensive. The objective of such policy shall be to attract, retain and motivate executive management and devise remuneration structure to link to Company's strategic long term goals, appropriateness, relevance and risk appetite.

NRC will identify, ascertain the integrity, qualification, appropriate expertise and experience, having regard to the skills that the candidate will bring to the Board / Company, whenever the need arises for appointment of Directors / KMP.

Criteria for performance evaluation, disclosures on the remuneration of Directors, criteria of making payments to Non-Executive Directors have been disclosed as part of Corporate Governance Report attached herewith.

Remuneration payable to Non-Executive Independent Directors

The shareholders at the Extra-ordinary General Meeting held on 27th July 2023 approved the payment of remuneration by way of commission not exceeding 1% of the net profits, in aggregate, payable to Non-Executive and Independent Directors of the Company (NE-IDs) for every year, from 1st April 2023.

NE-IDs devote considerable time in deliberating the operational and other issues of the Company and provide valuable advice in regard to the management of the Company from time to time, and the Company also derives substantial benefit through their expertise and advice.

Evaluation of Independent Directors and Committees of Directors

In terms of Section 134 of the Act, 2013 and the Corporate Governance requirements as prescribed under Listing Regulations, the Board reviewed and evaluated Independent Directors and various Committees viz., Audit Committee, Risk Management Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders' Relationship Committee, based on the evaluation criteria laid down by the NRC.

Board has carried out the evaluation of all Directors (excluding the Director being evaluated) and its Committees through a set a questionnaires.

Independent Directors

The performance of all IDs were assessed against a range of criteria such as contribution to the development of business strategy and performance of the Company, understanding the major risks affecting the Company, clear direction to the management and contribution to the Board cohesion. The performance evaluation has been done by the entire Board of Directors, except the Director concerned being evaluated.

The IDs were always kept informed of the constitution of robust framework for the Company and group companies against cyber threats and mitigation plans against cyber-attacks for business continuity.

They also kept abreast of risk mitigation plans on Business risks viz., depreciation of currency, global economic scenarios, increasing material cost and global inflationary pressure.

The Board noted that all IDs have understood the opportunities and risks to the Company's strategy and are supportive of the direction articulated by the management team towards consistent improvement.

On the basis of the report of performance evaluation of directors, the Board noted and recorded that all the directors should extend and continue their term of appointment as Directors / Independent Director, as the case may be.

Committees

Board delegates specific mandates to its Committees, to optimize Directors' skills and talents besides complying with key regulatory aspects.

• Audit Committee for overseeing financial Reporting;

• Risk Management Committee for overseeing the risk management framework;

• Nomination and Remuneration Committee for selecting and compensating Directors / Employees;

• Stakeholders' Relationship Committee for redressing investors grievances; and

• Corporate Social Responsibility Committee for overseeing CSR initiatives and inclusive growth.

The performance of each Committee was evaluated by the Board after seeking inputs from its members on the basis of specific terms of reference, its charter, time spent by the Committees in considering key issues, quality of information received, major recommendations / action plans and work of each Committee.

The Board is satisfied with the overall effectiveness and decision making of all Committees. The Board reviewed each Committee's terms of reference to ensure that the Company's existing practices remain appropriate.

Directors continued to devote such time as is necessary for the proper performance and effectively discharge their duties, all of them were able to devote appropriate time to fulfill their duties.

Board and its Committees had an appropriate combination of skills, experience and knowledge.

The current Committees structure was considered effective and all the Committees of the Board were all considered to be working effectively.

Recommendations from each Committee were considered and approved by the Board prior to its implementation, wherever necessary and there were no items where the Board had not accepted any recommendation of any Committee of the Board in the relevant financial year.

Details of Committees, its charter, functions are provided in the Corporate Governance Report attached to this Report.

Number of Board meetings held:

During the year under review, the Board met eight times and details of the meetings are provided as part of the Corporate Governance Report prepared in terms of the Listing Regulations.

12. AUDITORS Statutory Auditors

The Company at its 4th AGM held on 27th July 2021 re-appointed M/s. Raghavan, Chaudhuri & Narayanan, Chartered Accountants, Bengaluru, having Firm Registration No. 007761S allotted by The Institute of Chartered Accountants of India, as Statutory Auditors of the Company to hold office, for the first term of five consecutive years, from the conclusion of the said 4th AGM till the conclusion of the 9th AGM, at such remuneration in addition to applicable taxes, and reimbursement of travelling and other out of pocket expenses as may be mutually agreed between the Board of Directors of the Company on the recommendations of the Audit Committee and the Auditors.

The Company has obtained the necessary certificate under Section 141 of the Act, 2013 conveying their eligibility for being statutory auditors of the Company for the year 2024-25.

The Auditors' Report for the financial year 2023-24 does not contain any qualification, reservation or adverse remark and the same is attached with the annual financial statements.

Secretarial Auditor

As required under Section 204 of the Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company is required to appoint a Secretarial Auditor for auditing secretarial and related records of the Company.

The Board at its meeting held on 10th November 2023 has appointed Mrs B Chandra, Practising Company Secretary, Chennai, (CP No. 7859) as Secretarial Auditor for the financial year 2023-24. The Secretarial Audit Report for the financial year 2023-24, given by Mrs B Chandra, Practising Company Secretary, Chennai for auditing the secretarial and related records is attached to this report. The Secretarial Audit Report does not contain any qualification, observation or other remarks.

The Board at its meeting held on 10th May 2024 has re-appointed Mrs B Chandra, Practising Company Secretary, Chennai, (CP No. 7859) as Secretarial Auditor for the financial year 2024-25.

Cost Auditor

As per Section 148 of the Act, 2013 read with the Companies (Cost Records and Audit) Rules 2014, as amended, the cost audit records maintained by the Company in respect of parts manufactured by the Company covered under other machinery specified under Customs Tariff Act heading in Table B to Rule 3 of the above rules, are required to be audited by a Cost Auditor.

Pursuant to the Composite Scheme of arrangement being effective 11th August 2023, the Board of Directors based on the recommendation of the Audit Committee at their meeting held on 10th November 2023 appointed M/s. C S Adawadkar & Co having Firm Registration No. 100401 as Cost Auditor for the period 11th August 2023 to 31st March 2024 on a remuneration of Rs.5,00,000/- in addition to reimbursement of travel and out of pocket expenses, subject to ratification by the Shareholders of the Company.

Further, as recommended by the Audit Committee, the Board of Directors at their meeting held on 10th May 2024, re-appointed them as Cost Auditor of the Company on the same remuneration payable to them for the financial year 2024-25, subject to ratification by the Shareholders of the Company.

The Company has received consent from M/s. C S Adawadkar & Co., Practicing Cost Accountants, to serve as Cost auditor of the Company for the financial year 2024-25.

The Company has also received necessary certificate under Section 141 of the Act, 2013 from them conveying their eligibility to act as a Cost Auditor.

13. CORPORATE GOVERNANCE

The Company has been practicing the principles of good corporate governance over the years and lays strong emphasis on transparency, accountability and integrity.

A separate section on Corporate Governance and a certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under the Listing Regulations form part of this Annual Report.

The Director & Chief Executive Officer and Chief Financial Officer of the Company have certified to the Board on financial statements and other matters in accordance with Regulation 17(8) of the Listing Regulations, 2015 pertaining to CEO / CFO certification for the financial year ended 31 st March 2024.

14. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") read with relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed under "Business Responsibility and Sustainability Report" (‘BRSR'). The BRSR seeks disclosure on the performance of the Company against nine principles of the "National Guidelines on Responsible Business Conduct' ("NGRBCs").

As per the SEBI Circulars, effective from the financial year 2022-23, filing of BRSR is mandatory for the top 1,000 listed companies by market capitalisation. Accordingly, for the financial year ended 31st March 2024, the Company has published BRSR, in the prescribed format is given as Annexure V to this Report and is available on the Company's website in the link as provided in page no. 80 of this Annual Report.

15. POLICY ON VIGIL MECHANISM

The Company has adopted a Policy on Vigil Mechanism at the Board Meeting held on 11th August 2023 in accordance with the provisions of the Act, 2013 and Regulation 22 of the Listing Regulations, which provides a formal mechanism for all Directors, Employees and other Stakeholders of the Company to report to the management, their genuine concerns or grievances about unethical behaviour, actual or suspected fraud and any violation of the Company's Code of Business Conduct and Ethics.

The Code also provides a direct access to the Chairman of the Audit Committee to make protective disclosures to the management about grievances or violation of the Company's Code.

The Policy is disclosed on the Company's website in the link as provided in page no. 80 of this Annual Report.

16. PUBLIC DEPOSITS

The Company has not accepted any deposit from the public within the meaning of Section 76 of the Act, 2013, for the year ended 31st March 2024.

Information on conservation of energy, technology absorption, foreign exchange, etc.,

Relevant information is given in Annexure-I to this Report, in terms of the requirements of Section 134(3)(m) of the Act, 2013 read with the Companies (Accounts) Rules, 2014.

Material changes and commitments, if any, affecting the financial position of the Company, having occurred since the end of the Year and till the date of the Report:

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.

Significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company

There are no significant and material orders passed by the Regulators or Courts or Tribunals, which would impact the going concern status of the Company and its future operations.

Annual Return

Copy of the Annual Return (Annexure II) in prescribed form is available on the Company's website in the link as provided in page no. 80 of this Annual Report, in terms of the requirements of Section 134(3)(a) of the Act, 2013 read with the Companies (Accounts) Rules, 2014.

Employee's remuneration

Details of employees receiving the remuneration in excess of the limits prescribed under Section 197 of the Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed as a statement and given in Annexure-III. In terms of first proviso to Section 136(1) of the Act, 2013 the Annual Report, excluding the aforesaid annexure is being sent to the Shareholders of the Company. The annexure is available for inspection at the Registered Office of the Company during business hours as mentioned in the Notice of AGM and any Shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company.

Comparative analysis of remuneration paid

A comparative analysis of remuneration paid to Directors and employees with the Company's performance is given as Annexure-IV to this Report.

Details of material related party transactions

There are no material related party transactions under Section 188 of the Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

Policy on Related Party Transaction was approved by the Board at its meeting held on 11th August 2023.

Details of loans / guarantees / investments made

During the year under review, the Company had not granted any loans or guarantees covered under Section 186 of the Act, 2013.

Please refer note no. 4 to Notes on accounts for the financial year 2023-24, for details of investments made by the Company.

Reporting of fraud

The Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Act, 2013.

Secretarial Standards

The Company has complied with the applicable secretarial standards as amended from time to time.

General Disclosures

During the year, there were no transaction requiring disclosure or reporting in respect of matters relating to issue of equity shares with differential rights as to dividend, voting or otherwise;issue of shares (including sweat equity shares) to employees of the Company under any scheme; pendency of any proceeding under the Insolvency and Bankruptcy Code, 2016 and instance of one-time settlement with any bank or financial institution.

Disclosure in terms of Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH), the Company has an Internal Complaints Committee as required under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

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

During the year 2023-24, initiatives were undertaken to demonstrate Company's zero tolerance policy against discrimination and sexual harassment, which included creation of comprehensive and easy to understand training and communication material. In addition, online workshops were also run for the employees to enhance awareness and knowledge.

18. ACKNOWLEDGEMENT

The directors gratefully acknowledge the continued support and cooperation received from the promoters of the Company.

The Directors thank the vehicle manufacturers, vendors and bankers for their continued support and assistance.

The Directors wish to place on record their appreciation of the continued excellent work done by all the employees of the Company during the year.

The Directors especially thank the shareholders for their continued faith in the Company.