Sundaram Finance Holdings Ltd

Your directors have pleasure in presenting the 30^th Annual Report together with audited accounts for the year ended 31^st March 2024. The summarised financial results of the Company are presented hereunder:

OPERATING AND FINANCIAL PERFORMANCE:

DIVIDEND

Your Company paid an interim dividend of Rs2.00/- per share (40%) in February 2024 and declared a second Interim dividend of Rs3.65/- per share (73%) on 21^st May, 2024, payable in the month of June 2024.

In addition, your directors are pleased to recommend a final dividend of Rs2.05/- per share (41%on the face value of Rs5/-), which together with the interim dividend of Rs2.00/- per share paid during February 2024 and Rs3.65/- per share payable in June 2024, would aggregate to a total Dividend of Rs 7.70 per share (154% on the face value of Rs5/-) for the Financial Year 2023-24.

The Dividend Distribution Policy, formulated in accordance with the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is available in the company's website https://sundaramholdings.in/wp-content/ uploads/2023/12/10.-SFHL-Distribution-of-Dividends-Policy.pdf

Indian Economy

Amidst an uncertain and challenging global macroeconomic environment, the Indian economy presents a picture of confidence, positivity and optimism. As per the National Statistical Office's second advance estimates, real GDP growth for 2023-24 was at 7.6% on the back of buoyant domestic demand. The growth in GDP has been boosted by a healthy growth of 10.7% in the construction sector and 8.5% in the manufacturing sector. Growth in industry has been estimated at 8.3% compared to a negative growth of -0.6% in 2022-23.

The fiscal deficit, for the year 2023-24 is likely to hover around the revised estimate of 5.8% of GDP and has been estimated to be at 5.1% of GDP in the year 2024-25.

The International Monetary Fund (IMF) has raised India's growth forecast for 2024-25 to 6.8% from 6.5% on the back of strong domestic demand and a rising working-age population. Despite the challenges emanating from the pandemic and the subsequent external shocks, both the services and infrastructure sectors gradually rebounded as businesses reopened and restrictions eased.

Automotive sector outlook

Your company generates a significant portion of its income from dividend flows from the portfolio companies that are engaged in the automotive sector.

The auto industry saw volume declines for 3 consecutive years (FY20-FY22). FY23 witnessed a sharp uptick in growth of 20%, followed by 12% in FY24. During FY24, a few trends were prominently observed, premiumisation – across styles, powertrains, categories; pent up demand in certain segments playing out. Domestic EV penetration improved as OEs passed on benefits of battery price deflation to customers, thereby improving on the total cost of vehicle ownership for the customer.

Passenger vehicles, which grew overall by 8%, was a tale of two-segments. The small cars continued to struggle, reporting negative growth of 11%, while Used Vehicles did very well (26% growth) due to strong customer demand and model launches. There was a wide-spread adoption of Used Vehicles as the mix continued to remain over the 50% mark among Passenger vehicles.

The Commercial vehicle segment reported flat volumes vs FY23 but were able to post growth in tonnage terms through tractor trailer growth. Buses were seeing increased demand with state transport orders, school orders and inter-city travel picking up.

Tractors were relatively weaker within the segment due to El Nino impact and delayed subsidies due to election year. A recovery is expected due to normal monsoon and a return of subsidies. 2 Wheelers grew ~13% during the year. The 125 to 250cc segment was the sweet spot among 2W, which reported above-industry growth as the sub-110cc segment continued to upgrade into the 125cc+.

3 Wheelers reported a growth of ~42% driven by the dual benefit of deferred purchase post Covid and increasing penetration of CNG across states.

With indications of rural recovery on the horizon, 2 Wheelers are expected to sustain growth and tractor volume growth could turn positive supported by a favourable base. The Passenger Vehicle sector is expected to grow at mid-single digits driven by sporadic new launches and refreshes in the mid-segment and supportive base in the small cars segment. India is in midst of a resurgence of multi-year capex upcycle, which should continue to drive truck demand growth in medium-term.

Expected economic growth of more than 6%, sustained budgetary allocations towards infrastructure and continued strength in several high frequency indicators such as E-way bills, GST collections, electricity consumption, manufacturing PMI and mobility indicators continue to underpin a positive outlook on domestic auto sector.

EXEMPTED CORE INVESTMENT COMPANY

As at the date of the audited balance sheet for the financial year ended 31^st March 2024, the Company has fulfilled the requisite criteria for being categorised as an exempted CIC under the Core Investment Companies (Reserve Bank) Directions, 2016.

BUSINESS PERFORMANCE

The performance of key portfolio Companies during 2023-24 was buoyant, which resulted in your Company receiving higher dividend income of Rs160.40 Cr for the year ended 31.03.2024 as against Rs 97.43 Cr received during the Financial year 2022-23.

The Company holds investments in 18 portfolio companies as at 31.03.2024. The performance of the key portfolio companies during 2023-24 was as follows:

(*) Share of Loss from an associate divested during the year.

Note: The figures relating to the companies mentioned under Sl. Nos. 12 and 13 are based on the audited financial results for the year ended 31^st March 2023. The figures relating to the companies mentioned under Sl. Nos. 1 to 11 are based on the audited financial results for the year ended 31 Mar 2024.

Performance of our core investments are as given below,

Brakes India Private Limited

Brakes India Private Limited is the market leader in braking systems for cars and commercial vehicles in the country. Your Company's stake in Brakes India is 23.57% and has been categorised as one of the promoters of that company. Trichur Sundaram Santhanam and Family Private Limited is the other promoter of the company. The revenue earned by the company for the year ended 31^st March 2024 stood at Rs7,275.44 cr. as against Rs6,685.51cr in the previous year. The profit after tax for the year was 687.20cr. as against Rs465.63cr. in the previous year. Your Company received a total dividend of Rs39.92 cr. from Brakes India Private Limited during the financial year 2023-24.

Turbo Energy Private Limited

Turbo Energy Private Limited is the leading manufacturer of turbo chargers and turbo charger parts in the country. Your Company holds a 32% stake in Turbo Energy Private Limited and has been categorised as one of the promoters of that company. Borg Warner Turbo Systems (Germany) and Brakes India Private

Limited are the other promoters of the company. During the year, the revenue earned by the company stood at Rs3054.18 cr. as against Rs2,443.41 cr. in the previous year. The profit after tax for the year was Rs262.80 cr as against Rs228.20 cr. in the previous year. Your Company received a total dividend of Rs 68.86 cr. from Turbo Energy Private Limited during the financial year 2023-24.

Axles India Limited

Axles India Limited is a leading manufacturer of axle housings for medium and heavy commercial vehicles in the country. Your Company holds a 38.81% stake in Axles India Limited and has been categorised as one of the promoters of that company. Dana Corporation (USA) and Wheels India Limited are the other promoters of the company. During the year, the revenue earned by the company stood at Rs855.10 cr. as against Rs745.93 cr. in the previous year. The profit after tax for the year was Rs86.27 cr. as against Rs 52.64 cr. in the previous year.Your Company received a total dividend of Rs 8.90 cr. from Axles India Limited during the financial year 2023-24.

Wheels India Limited

Wheels India Limited is the leading manufacturer of wheels and air suspension components for cars and commercial vehicles in the country. During the year Sundaram Hydraulics Limited was merged with Wheels India Limited, pursuant to which our Company's stake in Wheels India Limited increased from 23.85% to 23.96%. Our Company is one of the promoters of Wheels India Limited. Trichur Sundaram Santhanam and Family Private Limited, and India Motor Parts & Accessories Limited are the other promoters of the company. During the year, the revenue earned by the company stood at Rs4619.03 cr., as against

Rs4,344.95 cr. in the previous year. The profit after tax for the year was Rs67.87 cr. as againstRs62.46 cr. in the previous year. The market capitalisation of the company as on 31^st March 2024 was

Rs1460.97 cr. The value of your Company's holding on that basis, was Rs350 cr., as on 31^st March 2024. Your Company received a total dividend of Rs2.28 cr. from Wheels India Limited during the financial year 2023-24.

Dunes Oman LLC (FZC)

Dunes Oman LLC (FZC), operating in Salalah, Sultanate of Oman, is engaged in the manufacture of iron castings for the automotive industry. Your Company holds a 43.69% stake in Dunes Oman LLC (FZC) and has been categorised as one of the promoters of that company. Dunes Oman was co-promoted with Brakes India Private Limited. The company's revenue for the year stood at Rs359.30 cr. as against Rs293.18 cr. in the previous year, while the profit after tax for the year was Rs 56.01 cr. as against Rs30.36 cr. in the previous year.

India Motor Parts and Accessories Limited

India Motor Parts and Accessories Limited is the largest distributor of automotive spare parts and equipment in the country. Your Company holds 20% stake in India Motor Parts and Accessories Limited. For the year ended 31^st March 2024, the revenue earned by the company stood at Rs 759.73 cr., as against

Rs 737.97 cr. in the previous year. The profit after tax for the year stood at 72.52 cr. as against Rs73.67 cr , for the corresponding period in the previous year. The market capitalisation of the company as on 31^st March 2024 was Rs1209.06 cr. The value of your Company's holding on that basis, was Rs242 cr., as on 31^st March 2024. Your Company received a total dividend of

Rs5.99 cr. from India Motor Parts & Accessories Limited during the financial year 2023-24

Sundaram Dynacast Private Limited

Sundaram Dynacast is a leading manufacturer of precision Zinc and Aluminium die-cast parts. Your Company holds a 26% stake in Sundaram Dynacast. The revenue earned by the company for the year ended 31^st March 2024 stood at Rs 157.13 cr. as against

Rs150.19 cr. in the previous year. The profit after tax for the year ended 31^st March 2024 was Rs20.11 cr. as against Rs 17.88 cr. in the previous year. Your Company received a total dividend of Rs 3.39 cr. from Sundaram Dynacast during the financial year 2023-24.

Sundaram Business Services Limited

Sundaram Business Services Limited (SBSL) a wholly-owned subsidiary of the Company, is a global outsourcing company offering a wide range of services to domestic and overseas clients. The service offerings of SBSL include best in class outsourcing to 31 clients predominantly in Australia, UK and India,. During the year, SBSL earned a revenue of Rs48.12 cr. and reported a profit after tax of Rs16.76 cr.

INVESTMENTS

During the Financial Year the Company had subscribed to the rights shares of 2,34,00,000 equity shares of Rs10/- each for cash issued at par by Sundaram Composite Structures Private Limited. Your Company holds 3,90,00,000 equity shares of Rs10/-each, representing 39% in the paid-up capital of Sundaram Composite Structures Private Limited.

Mind S.r.l Italy:

Carbon Fibre business is being managed by 2 entities – Mind S.r.l Italy and Sundaram Composite Structures Private Limited (Suncomp) in an integrated manner. Suncomp has set up factory for production of composites in India for supporting Mind S.r.l. Italy. Considering the support being extended by Suncomp to Mind Srl, Italy and to integrate two entities under the LEGGARO brand and for operational feasibility, during the financial year the Company had divested its entire holdings held in Mind S.r.l Italy to M/s Sundaram Composite Structures Private Limited. Consequent to the divestment, Mind S.r.l Italy ceased to be an associate of your Company.

TVS Holdings Limited:

During the financial year the Company divested 2,02,321 shares held in TVS Holdings Limited (formerly known as Sundaram Clayton Limited), representing 1% stake. The realised gain of

Rs150.73 cr. has been transferred from OCI Reserve to Retained Earnings-P&L. Post this sale, the Company holds 6.49% stake in TVS Holdings Limited.

The Company also received Rs175.67 cr on account of redemption of non convertible redeemable preference shares of TVS Holdings Limited,which was earlier classified in OCI as Items that will be reclassified to P & L.

CORPORATE GOVERNANCE

A detailed report on corporate governance, together with a certificate from the Secretarial Auditor, in compliance with the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is attached as part of this report, vide Annexure I.

Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.

RELATED PARTY TRANSACTIONS

All transactions entered into by the Company with related parties were in the ordinary course of business and on an arm's length basis. The transactions entered into by the Company with Sundaram Finance Limited during the financial year 2023-24 were material in nature (as per the definition provided under Regulation 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015), for which, approval of the shareholders was obtained vide ordinary resolution dated 14^th July 2022 and 14^th July 2023. The Company did not enter into any material transaction with other related parties, during the year.

Form AOC-2, as required under Section 134 (3) (h) of the Act, read with Rule 8 (2) of the Companies (Accounts) Rules 2014, is attached as part of this report, vide Annexure II (i). Further, the Company's policy on Related Party Transactions is attached as part of this report, vide Annexure II (ii), as required under Reg. 23(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the related party transactions with Sundaram Finance Limited, Promoter, have been provided under Note 28 – Related Party Transactions, forming part of the notes to the accounts. The Board of Directors of your Company , based on the recommendations of the Audit Committee has recommended the following resolutions to the shareholders for approval: Investments / Disinvestments to be made in group companies that would be deemed to be related parties, upto an overall aggregate amount not exceeding Rs500 cr. and individual investment(s) in any one such group company not exceeding Rs300 cr., from the conclusion of the 30^th Annual General Meeting to the conclusion of the 31^st Annual General Meeting to be held in 2025.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has contributed towards education, in consonance with its CSR policy. The Annual Report on CSR Activities undertaken by the Company for the Financial Year 2023-24 is annexed with this report, vide Annexure III.

BUSINESS RESPONSIBILITY& SUSTAINABILITY REPORT

A Business Responsibility & Sustainability Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015, is available in the company's website https://sundaramholdings.in/annual-reports/#annual-content .

DISCLOSURE UNDER THE ‘PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE POLICY'

The Company has in place a Policy for prevention of Sexual Harassment, in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition

& Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the financial year. None was pending unresolved as on 31^st March 2024.

SECRETARIAL AUDIT

In terms of Section 204 of the Companies Act, 2013 and the rules made thereunder, the Company has appointed Mr. A. Kalyana Subramaniam, Practising Company Secretary, as the Secretarial Auditor of the Company. The Secretarial Audit Reports of the Company and the subsidiary, viz., Sundaram Business Services Limited, are annexed to this Report, vide Annexures IV (i) and IV(ii).

REMUNERATION TO DIRECTORS / KEY MANAGEMENT PERSONNEL

Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed, vide Annexure V.

ANNUAL RETURN

As required under Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the annual return in E-form MGT-7 is available in the company's website https://sundaramholdings.in/annual-reports/#annual-content .

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material orders were passed by the regulators, courts, or tribunals against the Company, impacting its going concern status or its future operations.

INFORMATION AS PER SECTION 134(3)(M) OF THE COMPANIES ACT, 2013 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014

Your Company has no activity relating to conservation of energy or technology absorption.

INTERNAL FINANCIAL CONTROLS

The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies (b) safeguarding of assets (c) prevention and detection of frauds / errors (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information.

RISK MANAGEMENT

Your Company has taken effective steps to build a robust risk management framework. Engaged, as it is, in the business of making investments and in business process outsourcing services, the Company is required to manage various risks, including investment related risk, business and market risk, operational risk and technology related risk. The Risk Management Committee has established systems and procedures to ensure that these risks are identified, measured, and managed effectively.

Operational risks arising from inadequate or failed internal processes, people and systems or from external events are adequately addressed by the internal control systems. These systems are continuously reviewed, monitored, and modified, as necessary. A stable and experienced management team provides much needed continuity and expertise in managing the dynamic changes in the market environment. Process improvements and quality control are on-going imperatives and are built into the employees' training modules, as well. The Company has well documented Standard Operating Procedures for all processes to ensure better control over transaction processing and regulatory compliance.

INTERNAL AUDIT

As part of the efforts to evaluate the effectiveness of the internal control systems, your Company has employed the services of the Internal Audit Department (IAD) of Sundaram Finance Limited (SFL) to independently evaluate the adequacy of control measures on a periodic basis and recommend improvements, wherever appropriate. The Internal Audit team plays a vital role in continuously monitoring the effectiveness of the Standard Operating Procedures, as a part of risk mitigation.

The IAD of SFL is manned by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board.The Audit Committee regularly reviews the audit findings as well as the adequacy and effectiveness of the internal control measures.

HUMAN RESOURCES

In an environment that is rapidly becoming technology and digital oriented, your Company believes in investing in long term people development, for organisational excellence. Part of the enduring tradition of the Sundaram Finance Group, over the decades, has been the handing down of wisdom to successive generations of employees, using the conventional methods of listening, observing and on the job training. Your Company proposes to continue the tradition along with appropriate technological support to meet the challenges of growth and scale.

Employee safety has been of prime importance to your Company during the pandemic. With a view to ensuring the safety of its employees alongside business continuity, the Company has put in place all the standard operating procedures notified by the Central and State Governments, and these are implemented in full measure, together with appropriate ‘work from home' policies.

INFORMATION TECHNOLOGY

Your Company, has a robust IT infrastructure in place to ensure data security with multi-factor authentication to reduce the risk of unauthorized information access and business continuity with dedicated cloud hosting and real-time data replications providing 99.5% uptime.

The delivery centres meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability) Standards. To cater to the ever-changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of Section 129 (3) of the Companies Act, 2013, the Consolidated Financial Statements, drawn up in accordance with the applicable Accounting Standards, form part of the Annual Report. A separate statement containing the salient features of the financial statements of your Company's Subsidiary and Associates in Form AOC-I forms part of the Annual Report.

The annual report of the subsidiary, Sundaram Business Services Limited, has been posted on your Company's website – www.sundaramholdings.in. Detailed information, including the annual accounts of the Subsidiary Company will be available for inspection by the members, at the registered office of the

Company and will also be made available to the members upon request.

BOARD AND AUDIT COMMITTEE

The details regarding number of Board Meetings held during the financial year and composition of Audit Committee are furnished in the Corporate Governance Report.

DIRECTORS

The second term of office of Independent Director Sri S Prasad concluded on 15^th February 2024 and the Board placed on record, its deep appreciation for the significant contribution made by Sri S Prasad, Independent Director to the deliberations of the Board and for his able guidance to the Company during his tenure as an Independent Director.

Ms. Sripriya Kumar was appointed as an Independent director on the Board with effect from 11th January 2024. Sri Srivats Ram, Director, retires by rotation and being eligible, offers himself for re-election.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6).

ANNUAL EVALUATION BY THE BOARD

The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3)(p) of the Companies Act, 2013.

DIRECTORS' RESPONSIBILITY STATEMENT

Your directors confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

2. The Company has selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

3. Proper and sufficient care has been exercised for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

4. The annual accounts have been prepared on a going concern basis ;

5. Adequate internal financial controls have been put in place and they are operating effectively; and

6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

AUDITORS

M/s R.G.N. Price & Co., Chartered Accountants, Chennai, have been appointed as Statutory Auditors of your Company, to hold office for a term of five (5) consecutive years from the conclusion of the 28^th Annual General Meeting until the conclusion of the 33^rd Annual General Meeting at such remuneration as may be mutually agreed between the Board of Directors of the Company and the Statutory Auditors.

ACKNOWLEDGEMENT

Your directors gratefully acknowledge the support and cooperation extended to your Company by all its customers, shareholders, and bankers. Your directors also place on record their special appreciation of the employees of the Company for their dedication and commitment in delivering the highest quality of service to every one of our valued customers.