High Energy Batteries (India) Ltd

<dhhead>BOARD'S REPORT</dhhead>

Your Board hereby presents the 64^th Annual Report and the Audited Accounts for the year ended 31^st March 2025.

1. OPERATING RESULTS

The Company's financial performance under review is summarized below: (Rs in Lakhs)

The Company recorded a turnover of Rs 8,099.82 lakhs in the year FY 2024 - 25, as compared to Rs 7,813.77 lakhs, during the previous Financial Year 2023 - 24.

2. DEPOSITORY SYSTEM

The total number of shareholders as on March 31, 2025 was 25,650 comprising 89,63,840 shares (Face value of Rs 2/- each) and out of those, 25,557 shareholders comprising 88,62,660 shares are held in

Demat form representing 98.87% of the total Equity Share Capital compared to 98.71% as of FY 2023 - 24.

3. DIVIDEND

Your directors recommend a dividend of 150% (Rs 3/- (Rupees Three only)) per equity share of Rs 2/- each for the financial year ended 31^st March 2025, absorbing a sum of Rs 268.92 lakhs, subject to the approval of shareholders at the ensuing 64^th Annual General Meeting.

a. SILVER ZINC BATTERIES

The Company achieved a turnover of Rs 7,772.27 lakhs through Silver Zinc Battery supplies during the FY 2024 - 25 as against Rs 7,160.85 lakhs, during the FY 2023 - 24.

b. NICKEL CADMIUM BATTERIES

During the year, the turnover of Nickel Cadmium Division was Rs 302.95 lakhs, as against Rs 561.66 lakhs during FY 2023 - 24. The modernization goal of Railways for development cum supply of both sintered plate type and pocket plate type Nickel Cadmium (NICAD) batteries, is under progress. Discussions are in progress with reputed companies abroad, to establish local manufacturing base, during FY 2025 - 26.

c. LEAD ACID BATTERIES (LAB)

As reported earlier, the operations of our Lead Acid Battery division remain suspended since April, 2019 due to severe competition in the retail market resulting in non-remunerative prices. While our efforts are continuing towards the revival of the Plant, favorable options could not be arrived at, that will ensure sustainable operations in terms of volume of production and competitive pricing.

d. EXPORTS

During the year, the export turnover was Rs 1,222.08 lakhs, resulting in substantial increase in value when compared to Rs 40.14 lakhs made during FY 2023 - 24. All efforts are being made to further improve the export performance.

e. FINANCE

The financial position of the Company was comfortable during the year, owing to our improved operations, coupled with judicial utilization of working capital limits and also reduction in interest rate(s) by the Banks.

Though the Company is categorized as MSME (presently "Small" category since April 2025), due to the internal procedures of the Defense / Government departments, the respective payments were getting delayed at times. On such occasions, the needed financial support was duly cognized and supported by our Bankers, to ensure smooth and sustained operations of our plant.

f. ISO 9001 / ISO 14001, OHSAS 45001 CERTIFICATION ACCREDITATION

Our Quality Management Systems "(QMS) ISO 9001:2015", "Environmental Management Systems" (EMS) ISO 14001:2015 and OHSMS 45001: 2018 "Occupational Health and Safety Management Systems (OHSMS), continue to be accredited for "Aerospace, Naval Battery" and "Lead Acid Battery" Divisions.

i. DRDO Program

During FY 2022 - 23, our R & D received orders for the development cum supply of two different varieties of batteries involving Silver Zinc system and Silver Chloride Magnesium for Heavy and Light Weight Torpedoes respectively. The design of the Silver Zinc cells also had distinct constructional features that will enable handling of cells to the minimum possible during battery preparation. On similar lines, the Sea Water Battery is of a much higher power levels of 100 kW plus, that can be catered to as a maximum for any typical Light Weight Torpedo (LWT) requirement. Both the programs were completed satisfactorily within the stipulated period and the supply of batteries is already effected after completion of user trials. Regular production is expected to commence during the FY 2025 - 26.

ii. One Shot Battery

This battery is held by Navy for a Strategic Underwater application. The parameters

and the required specification details are to be evaluated through systematic trials and process. The study was carried out by the Company. Performance of the battery was found to be satisfactory and all the needed technical parameters were generated during the test, in co-ordination with Indian Navy (IN) Personnel. Expect IN to initiate a development cum supply program for this battery, during the FY 2025 - 26.

iii. Long Life Sea Water Battery

The purpose of this battery is to provide power for underwater monitoring instruments for over a year continuously. Activities pertaining to the design, development cum evaluation of long endurance Sea Water battery was initiated during FY 2022 - 23 through TDF (Technology Development Fund) DRDO. The testing of the battery is under progress (one at HEB premises and one number in co-ordination with NIOT Chennai at sea). This battery type is expected to get into production mode during FY 2025 - 26.

iv. Energy related Centre for High Technology (CHT) Programs

(a) A development program pertaining to Hydrogen economy, was initiated during FY 2022 - 23 funded by both Centre for High Technology (CHT) & ONGC Energy Centre Trust (OECT) and with our participation. Based on the satisfactory performance of the proto units, this project was completed and handed over during March 2025 (FY 2024 - 25).

The objective of this project was to demonstrate the separation of Hydrogen and Oxygen, compression at higher pressures and then storage of Hydrogen in cylinders for further storage and / or transportation. The team from CHT and OEC visited the facility during March 2025 and cleared the completion of the project.

(b) On similar lines CHT had initiated another program during FY 2023 - 24, with IOCL and GAIL as funding agencies and with our participation. The target of this two-year program is to come up with a low power Fuel Cell (FC) stack using Hydrogen and Air.

On this, optimization of membranes, the catalysts, catalyst loading and small size 1kW proto type stack evaluation are in progress. The Process flow and control parameters for proto development is established and this program will be completed including the testing cum evaluation of a scaled up 2.5kW plus level unit, during the FY 2025 - 26.

v. Vanadium based flow battery (VRFB) - Energy Storage

Based on the satisfactory demonstration cum completion of the development program with OECT on 1kW / 10kWh module carried out in co-ordination with IIT Chennai, OECT preferred to initiate the next level of funded program with our participation.

Main scope of the program involves scaling up of the system to 10 kW / 100kWh rating and further evaluation, on stand-alone storage mode using Solar PV based energy harness. Activities pertaining to this contract had started from March 2024 and the proposed work is in progress and will be completed during FY 2025 - 26.

On similar lines, our Company is also exploring other opportunities by participating in Tenders on VRFB segment which shall continue in FY 2025 - 26.

vi. Lithium-Ion Battery (LIB)

The facility for cell screening, making battery pack assembly and testing as pack or battery on a low volume level using second life LIB packs, is now fully established.

We have made a number of standalone Solar PV based street lights which are regularly monitored and evaluated at different locations at Mathur village.

During FY 2024 - 25 Solar PV based street lights using Lithium based secondary cells were manufactured and efforts are on, to work on Lithium-Ion Battery (LIB) for other applications including low power off-grid UPS systems, as part of in-house development, testing and supply.

vii. Reels Indigenization

The indigenization activity initiated during FY 2024 - 25, on Reels required for the tethering of Torpedoes while firing at sea is in progress and would be pursued further during FY 2025 - 26.

6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed discussion on the industry structure as well as on the financial and operational performance is contained in the 'Management Discussion and Analysis Report' that forms an integral part of this Report as Annexure - 1.

7. CORPORATE GOVERNANCE

Pursuant to Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, Corporate Governance Report together with the certificate from the Company's auditors confirming the compliance of conditions on Corporate Governance is given in Annexure - 2. The Corporate Governance Report also includes contents and disclosures required under Section 134(3) of the Companies Act, 2013 at relevant places that forms an integral part of this report.

8. EXTRACT OF ANNUAL RETURN

Pursuant to provisions of Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, a copy of annual return for FY 2024 - 25 will be placed on the website of the company

www.highenergv.co.in after conclusion of the 64^th AGM. However, a copy of Annual Return for FY 2023 - 24 has already been placed on the website of the Company.

9. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, your Board confirms that:

(a) in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there are no material departures from the same;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company, at the end of the financial year and of the profit of the Company for that period;

(c) the Directors have taken proper and sufficient care towards 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;

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

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

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

10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year, the Company did not give any loan or guarantee or provide any Security, which are covered under Section 186 of the Companies Act, 2013. However, the Company, in terms of investment, purchased 55,000 Equity shares of M/s. Seshasayee Paper and Board Limited, Promoter of the Company during the period January 2025 to March 2025, valued at '1.59 crores.

11. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY

The Company remains outside the purview of Section 188(1) read with Rule 15 of Companies (Meeting of Board and its Powers) Rules, 2014, and the reporting requirements thereunder are not applicable.

Pursuant to SEBI vide its Circular dated 14.02.2025, has mandated the entities to follow 'Industry Standards on Minimum information to be provided for review of the Audit Committee and shareholders (based on applicability) for approval of a related party transaction'. The Company obtained the approval of Audit Committee and Board for the related party transactions to be entered for FY 2025 - 26.

12. MATERIAL CHANGES AND COMMITMENTS

There was no change in the nature of business of the Company during the year. There is no material change or commitment affecting the business operations and the financial position of the Company since the close of the Financial Year as on 31^st March 2025, to the date of this Report.

13. CONSERVATION OF ENERGY

Information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, as required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 is given in Annexure - 3, that forms part of this report.

14. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The company is covered under the mandate of Section 135 of the Companies Act, 2013 for FY 2024 - 25. The CSR Report, in the prescribed form is given in Annexure - 4, that forms part of this report.

15. PARTICULARS OF EMPLOYEES

The Statement of Disclosure of Remuneration under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in Annexure - 5, that forms part of this report.

16. CLASSIFICATION OF MICRO, SMALL AND MEDIUM ENTERPRISES (MSME)

The Company comes under MSME classification, since 01^st July 2020 as "Small" Enterprises (UDYAM-TN-02-0000445). The said category was changed as "Medium" Enterprises from Small w.e.f. 16^th May, 2021. The Company complies with all the requirements of MSME and further, avails/ utilizes the benefits, arising out of this reclassification including GOI / MOD contracts and Bank operations.

MSME vide notification number S.O. 1364(E) dated 21^st March, 2025 defined the revised threshold for investment and turnover which is effective from 01 ^st April, 2025. As per the said notification, the Company was categorized as "Small" under MSME Classification with effect from 01^st April, 2025.

17. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

(i) The Company has laid down adequate systems and well-drawn procedures for ensuring internal financial controls. It has appointed an external audit firm as Internal Auditors for periodically checking and reviewing the adequacy of systems.

(ii) Internal Auditors discuss the Internal Audit Reports at the Audit Committee meetings and present periodical compliances and observations, made by them.

(iii) The Board of Directors have adopted various policies like Related Party Transactions Policy and Whistle Blower Policy and put in place budgetary control and monitoring measures for ensuring proper and efficient conduct of the business of the Company, safeguarding of its assets, prevention and detection of frauds and errors, accuracy of reporting, completeness of the accounting records and the timely preparation cum presentation of reliable financial information.

(iv) Audit Trail requirements as per New Standards, are available in ERP system.

18. INDIAN ACCOUNTING STANDARDS (Ind AS)

The Financial Statements of the current year are prepared as per Ind AS, which was adopted since Financial Year 2017-18.

19. CASH FLOW STATEMENT

As required under Regulation 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Cash Flow Statement is attached to the Balance Sheet.

20. INDUSTRIAL RELATIONS

Relations between the Management and Employees were cordial throughout the year under review. The Management ensured that all necessary steps were taken to follow the guidelines / norms of safety and health mandated by the Government.

During FY 2024 - 25, the company initiated the wage negotiation and the same is in progress.

21. DIRECTORS

(a) Pursuant to Section 152 (6) of the Companies Act, 2013 and in accordance with Article 89 of the Articles of Association of the Company, Mr. N Gopalaratnam (DIN:00001945), Chairman of the Company, retires by rotation at the ensuing 64^th AGM of the Company and being eligible offers himself for re-appointment, through Special Resolution. Due disclosure and rationale for his reappointment are furnished in the statement pursuant to Section 102(1) of the Companies Act, 2013 attached to the AGM Notice.

Necessary resolution is placed before the Shareholders for their approval.

(b) Pursuant to Section 149, 152 and other applicable provisions of the Companies Act, 2013 and Regulation 17 (1C) of the SEBI (LODR) Regulations, 2015, Mr. M Ignatius (DIN:08463140) was re-appointed as Whole time Director designated as Director (Operations) of the Company for a period of three (03) years from 01^st April ,2025 to 31^st March, 2028, by a Special resolution passed through Postal Ballot by the Shareholders on 19^th March, 2025. The voting results of the Postal ballot process declared that the resolution has been passed with requisite special majority as a Special Resolution.

(i) Statutory Auditors

The Company obtained the approval of Shareholders at the 61^st AGM held on 29^th June, 2022 for the appointment of M/s. Maharaj N R Suresh And Co LLP, Chartered Accountants as Statutory Auditors of the Company for a Second term of Five years in the 61^st Annual General Meeting held on 29^th June, 2022 and their term will expire at the 66^th Annual General Meeting of the Company.

(ii) Internal Auditors

On the basis of recommendation of Audit Committee, the Board at its meeting held on 21^st January, 2025 appointed M/s. R Subramanian And Company LLP, Chartered Accountants as Internal Auditor of the Company for a period of two (2) years, from FY 2025 - 26 & FY 2026 - 27.

(iii) Secretarial Auditors

Pursuant to Regulation 24A of SEBI (LODR) Third Amendment Regulations, 2024 dated 12^th December, 2024, relating to the appointment of Secretarial Auditor, the Board at its meeting held on 10^th May, 2025 recommended the appointment of M/s. V Suresh Associates, Practicing Company Secretaries as Secretarial Auditor for a term of Five (05) consecutive financial years from FY 2025 - 26 to FY 2029 - 30, subject to the approval of the shareholders at this Annual General meeting.

(iv) Cost Auditors

The appointment of Cost Auditors is not mandatory for the Company during the FY 2025 - 26.

Particulars of Statutory Auditor, Internal Auditor and the Secretarial Auditor are given in the "Corporate Governance" Report that forms an integral part of this Report.

Secretarial Audit Report, as required by Section 204(1) of the Companies Act, 2013, is attached as Annexure - 6.

ACKNOWLEDGEMENT

Your directors wish to express their sincere thanks to:

(i) all the valued customers viz., Defense Services, VSSC, ISRO, RCI, ASL, DRDO Laboratories and Ministry of Defense (MOD), NSTL, NPOL, NMRL, BDL, BrahMos (BAPL), BEL, HAL, ADE, ADA, Mahindra Defense, and other Defense based organizations such

as DGONA, DAPI, CVRDE, MGO, Air (HQ), HQMC for the whole-hearted support and encouragement, towards indigenous sourcing of Batteries for strategic applications, fulfilling Atma Nirbhar.

(ii) all our valued Govt Statutory Bodies like IOF, PCB and Inspection cum Certifying agencies such as CEMILAC, DGAQA, DGNAI, MSQAA, SSQAG, R&QA for their timely and meticulous adherence of Quality Assurance / Product acceptance procedures.

(iii) Educational Institutions viz., NIT(T), IIT Chennai for their co-operation and technical support to our R & D progress. OECT, part of ONGC for initiating a program on Vanadium Redox Flow Battery (VRFB), Centre for High Technology (CHT) in partnership with OECT, IOCL and GAIL for initiating development activities pertaining to Fuel Cells and Electrolyzer based Green Energy using Hydrogen, Research Institutions like CECRI, for actively involving in our Indigenization efforts.

(iv) the Overseas customers, who have reposed utmost faith and confidence in our products.

(v) the Consortium of Bankers viz., UCO Bank Limited (UCO) and Punjab National Bank (PNB) for extending timely financial support towards the continued positive performance of the Company.

(vi) the Employees at all levels of the company for their co-operation, harmonious working to achieve committed deliveries and the sincere efforts put in to sustain the performance.

(vii) to all suppliers, vendors, service providers, sub - contractors and Shareholders for their continued trust and support.