Shriram Pistons & Rings Ltd

To the Members,

The Board of Directors ("Board") are pleased to present the 60^th Annual Report on the business and operations of Shriram Pistons & Rings Limited ("the Company") along with the Audited Financial Statements (Standalone and Consolidated), for the financial year ended March 31, 2024.

The financial year 2023-24 was one of our best years. The Company continued to focus on growing its business in multiple areas and improving supplies to different segments of the Market, thereby de-risking its business model. The Company remains committed to invest in strategic areas of new technologies which will help the Company to enhance its product portfolio and take advantage of the opportunities available in the market.

In the financial year 2023-24, the Company outgrew the domestic automotive market, which grew by around 7%. In contrast, the Company achieved a growth rate of 14.5%.

This was possible due to a rigorous focus on improving manufacturing capacity, exceeding existing customers' expectations leading to a higher share of business, exploring newer markets, onboarding new customers, entering new geographies and increasing the product portfolio.

The Company believes and has confidence while it is servicing the Internal Combustion Engines (ICE) it will continue to invest in newer areas agnostic to ICE thereby creating a good parallel and profitable business.

Financial & Operational Performance and State of Company's Affairs Financial Year 2023-24 has been a remarkable year for the Company as the Company has delivered the highest-ever financial performance by crossing the Rs. 30,000 Million milestone in terms of the total income. The Company's excellent brand image as the leading manufacturer and exporter of its products in India, backed by cutting-edge technology and technological collaborations with global leaders, enabled the Company to achieve these feats.

The Company's total income increased by 14.5% from Rs. 26,513 Million in the previous year to Rs. 30,351 Million for the year and revenue from operations grew by 13.4% from Rs. 26,050 Million in the previous year to Rs. 29,537 Million for the year. Profit before Depreciation and Taxes (before Other Comprehensive Income), after all interest charges, grew by 39.97% from Rs. 4,903 Million in the previous year to Rs. 6,862 Million for the year.

The performance improvement was contributed by factors like increase in production & sales, streamlining of the supply chain, digitization, focused approach to meet customer requirements, effective management of cash flow, implementing affordable automation, interlinking of machines, energy conservation, productivity improvement across products and implementation of cost optimization measures including effective & efficient utilization of resources.

The Company is taking persistent measures as a part of Business Continuity Planning to outgrow its business as compared to the Market. Based on the strength of its financials, the Company is well-positioned to invest in various avenues to grow the business.

To meet the Company's vision for diversification and growth, the Company undertook two acquisitions through its wholly-owned subsidiary, SPR Engenious Limited (SEL): - acquired a 51% stake, which was subsequently enhanced to 66.42%, in SPR EMF Innovations Private Limited (formerly EMF Innovations Private Limited). SPR EMF Innovations Private Limited (SPR-EMFI) is a young technology company operating in the electric vehicle (EV) space. SPR-EMFI leverages Singapore's strong power electronics research base and India's extensive manufacturing ecosystem to deliver cost-effective and reliable electric motors and controllers for green mobility applications.

Through its R8iD and manufacturing facility in Coimbatore, Tamil Nadu, SPR-EMFI manufactures electric motors and controllers that have applications across passenger vehicles, two & three-wheelers, commercial vehicles like buses, trucks, and also for various other applications. Through this acquisition, the Company has marked its foray into the EV component segment. SPR- EMFI will be among the top few companies supplying electric motors and controllers together, sized for specific applications for customers with capabilities and capacities to manufacture motors and controllers for applications ranging right from 250 watts to 300 kilowatts across all segments. SPR-EMFI is in the process of building another state-of-the-art manufacturing facility near its existing facility in Coimbatore, Tamil Nadu.

Moreover, to further augment its technical capabilities, SPR-EMFI has also executed technical collaboration agreements for motors and controllers, helping it in developing certain India-related applications, in line with the Government of India's drive towards Atma-Nirbharta. acquired a 62% stake in SPR Takahata Precision India Private Limited (formerly Takahata Precision India Private Limited), in October 2023. SPR Takahata Precision India Private Limited (SPR-TPIPL) is a manufacturer of high-precision plastic injection molded parts for automotive applications and has a technical collaboration with Takahata Japan, a leading high-precision injection molded parts manufacturing company globally.

SPR-TPIPL has a state-of-the-art manufacturing facility in Neemrana, Rajasthan, which enables it to conduct end-to-end operations, right from designing, manufacturing and inspection, all under one roof.

These acquisitions of SPR-EMFI and SPR-TPIPL mark the Company's foray primarily into products agnostic to ICE.

The summarized standalone and consolidated results of the Company are as under:

Financial Highlights

Despite the ongoing geopolitical issues, the Company's exports registered a growth of 7% from Rs. 4,841 Million to Rs. 5,182 Million. This was due to the strengthening of relationships with the existing customers, range expansion and entering new markets & product segments.

The Company continues to invest in the right areas ahead of time to seize opportunities globally, however, other headwinds leading to uncertainties will be a critical factor for sales in the export market.

The Company also improved its performance in the Aftermarket byre-designing its network strategy to increase the range and reach of its products. The Company focuses on achieving the highest standards of quality, which has been well appreciated by all our customers.

With a well-equipped Technology Centre having self-sufficiency in end-to-end design & development, local engineering capability and analysis tools like FMEA & PFMEA, the Company is focusing on forward-looking technologies such as testing products for CNG requirement, solutions for hydrogen as a fuel, ethanol blending, etc.

The Company anticipates a continued rise in the penetration of electric vehicles (EV) supported by the ambitious targets set by the Government. There are challenges like Infrastructure availability, raw material sources and availability of robust designs to cater to Indian conditions in the EV market which will impede vertical growth. However, the Company sees these challenges as opportunities since it is one of the few companies in the EV segment that has focused on grounds-up development thereby creating robust designs suitable for the Indian road conditions.

Amidst these developments, the conventional ICE and industrial engines in its various forms are looking towards greener solutions like Hybrid, CNG, LNG, hydrogen-powered vehicles, H-CNG (where hydrogen is blended with CNG) and other flex fuels.

The Company believes that ICE, along with EVs, are poised to co-exist to meet the inherent demand of the growing market.

6P PRINCIPLES

Management is continuously focusing on the following 6 Principles (6 Ps) to transform the Company into a high-performance organization: -

Core Organization Values (respect for people, doing things right, standing up against any wrongdoings)

OTTT Framework (operate with openness, transparency, trust and teamwork)

Continuous Improvement through Challenging the Status quo Creating a Learning Organization Culture of Execution and Appreciating and Motivating Performance at all levels Awards & Accolades

The Company received multiple awards this year, a few of which are mentioned here:

Quality/Delivery awards from OEMs viz. Escorts Kubota, Ashok Leyland, Maruti, Hyundai, HMSI, Bajaj Auto; and Various other awards from CM, ACMA, Engineering Export Promotion Council and others.

Share Capital

During the year, the Company has issued and allotted 2,20,24,912 equity shares of face value of Rs. 10/- each as fully paid-up bonus shares representing a ratio of 1 (One) equity share for every 1 (One) equity share as on the record date i.e. July 24, 2023, in compliance with the provisions of the Companies Act, 2013 (Act) and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

Consequent to the bonus issue, the paid-up share capital increased from Rs. 22,02,49,120/- (comprising of 2,20,24,912 equity share of Rs. 10/- each) as on March 31, 2023 to Rs. 44,04,98,240/- (comprising of 4,40,49,824 equity share of Rs. 10/- each) as on March 31, 2024. The shares so allotted rank pari-passu with the existing share capital of the Company. Except as stated herein, there was no other change in the share capital of the Company. The authorised share capital of the Company is Rs. 825 Million.

During the year, the Company has not issued any equity shares with differential rights/sweat equity shares under the Companies (Share Capital and Debentures) Rules, 2014.

Dividend Distribution Policy

In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosures Requirements) Regulations, 2015 ("SEBI Listing Regulations, 2015") the Board of Directors of the Company had formulated and adopted the Dividend Distribution Policy (DD Policy). The same is available on the Company's website at https://shrirampistons.com/investors-guide-2/.

The Board while making decisions for recommendations of the dividend takes guidance from the DD Policy and maintains a consistent approach to dividend pay-out plans.

Dividend

The Board in its meeting held on May 13, 2024, has recommended that equity shareholders be paid a dividend @ Rs. 10.00 per share of face value of Rs. 10/- each fully paid-up, for the financial year 2023-24, inclusive of Rs. 5.00 per share already paid as interim dividend.

The final dividend of Rs. 5.00 per share, if approved by the Members at the ensuing Annual General Meeting ('AGM') will be paid to those Members whose name appears on the register of Members (including Beneficial Owners) of the Company as at the end of Wednesday, July 17, 2024 (Record Date). The equity dividend would absorb Rs. 440 Million against Rs. 330 Million last year and an amount of Rs. 4,204 Million be transferred to General Reserve Account.

The Board has recommended the dividend based on the parameters laid down in the Dividend Distribution Policy and the dividend will be paid out of the profits of the FY 2023-24.

Pursuant to the Finance Act, 2020, dividend income is taxable in the hands of the Members w.e.f. April 1, 2020 and the Company is required to deduct tax at source (TDS) from dividend paid to the Members at prescribed rates as per the Income Tax Act, 1961.

New Projects and Capacity Expansion

The Company has been able to increase its market share across all customer segments. The Company expects the Aftermarket, OE spares, Off-road applications and Exports to have a much longer life span, thereby de-risking its business model.

To meet the Company's vision for diversification and growth in areas other than ICE, the Company has been actively working on identifying suitable opportunities to further diversify its existing product portfolio.

Change in the Nature of Business

During the year under review, there has been no change in the nature of the Company's business.

Material Changes and Commitment

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year 2023-24 and the date of this Report.

Credit Rating

The details pertaining to credit ratings obtained by the Company during the financial year are provided in the Corporate Governance Report, which forms part of this Annual Report and the same have been placed at the website of the Company at https://shrirampistons.com/investors-guide-2/ under "Credit Ratings" tab.

Name Change of Subsidiaries

During the year under review, the Board of EMF Innovations Private Limited and Takahata Precision India Private Limited in their respective meetings held in January 2024 approved changing the name of the companies to incorporate the word "SPR" as a prefix in their respective names. After approval by the shareholders of the companies and the Registrar of Companies (ROC), the names stand changed to "SPR EMF Innovations Private Limited" (formerly EMF Innovations Private Limited) and "SPR Takahata Precision India Private Limited" (formerly Takahata Precision India Private Limited).

Listing of Equity Shares on the BSE Ltd. (Bombay Stock Exchange)

The equity shares of the Company are already listed on the National Stock Exchange Ltd. (NSE). Now, the Board in its meeting held on 13.5.2024 approved to list the equity shares of the Company at BSE also, subject to necessary approvals.

Subsidiary Companies and their Annual Accounts

i. SPR Engenious Limited (SEL)

SEL was incorporated as a wholly owned subsidiary (WOS) of the Company to diversify its product portfolio in the area related to the automotive segment. SEL commenced manufacturing operations in March 2024 at its manufacturing facility situated at Pithampur, Indore, Madhya Pradesh.

During the year under review, SEL has increased its Authorised Capital from Rs. 1,250 Million to Rs. 3,550 Million and issued 230 Million equity shares of Rs. 10/- each amounting to Rs. 2,300 Million to its Holding Company, Shriram Pistons & Rings Limited, on rights issue basis, from time to time. The issued, paid up & subscribed equity share capital of SEL is Rs. 3,500 Million as of the date of this report.

SEL became a 'material' subsidiary of the Company under Regulation 16(l)(c) and 24A(1) of SEBI Listing Regulations in October 2023 and February 2024 respectively. However, based on the financial statements for the FY 2023-24, SEL does not qualify to be a 'material subsidiary' as per Regulation 24(1) of SEBI Listing Regulations, 2015, as on date of this report.

ii. SPR EMF Innovations Private Limited (SPR-EMFI)

The Company through its wholly owned subsidiary SEL, on 11.1.2023 acquired a 51% stake, which was subsequently enhanced during the year to 66.42%, in SPR-EMFI. Accordingly, SPR-EMFI continued to be a subsidiary of SEL and a step- down subsidiary of the Company.

During the year under review, SPR-EMFI issued 55,11,811 Nos. equity shares of face value Rs. 10/- each at a premium of Rs. 117/- per share amounting to Rs. 700 Million to SEL on rights basis. The authorised share capital of SPR-EMFI is Rs. 350 Million and the issued, paid up & subscribed equity share capital is Rs. 175.17 Million as of the date of this report.

iii. SPR Takahata Precision India Private Limited (SPR-TPIPL)

The Company through its wholly owned subsidiary SEL, on 16.10.2023 acquired a 62% stake in SPR-TPIPL. Accordingly, SPR- TPIPL became a subsidiary of SEL and a step-down subsidiary of the Company.

During the year under review, no Company ceased to be a subsidiary of the Company.

Consolidated Financial Statement

The consolidated financial statements of the Company and its subsidiaries for FY 2023-24 have been prepared in compliance with the applicable provisions of the Companies Act, 2013 ('the Act') and as stipulated under Regulation 33 of SEBI Listing Regulations, 2015 as well as in accordance with the Indian Accounting Standards (Ind AS-110) on Consolidated Financial Statements notified under the Companies (Indian Accounting Standards) Rules, 2015. The audited consolidated financial statements together with the Independent Auditor's Report thereon form part of this Annual Report.

Pursuant to Section 129(3) of the Act, a statement containing the salient features of the financial statements of the subsidiary companies is attached to the financial statements in Form AOC-1 as Annexure -VIII.

The Audit Committee of the Company and Board of Directors reviews the financial statements of subsidiary companies. Further, pursuant to the provisions of Section 136 of the Act, the Company will make available the said financial statement of the subsidiary companies upon a request by any Member of the Company or its subsidiary companies. These financial statements of the Company and the subsidiary companies will also be kept open for inspection by Members. The Members can send an e-mail to compliance.officerOshrirampistons.com upto the date of the AGM and the same would also be available on the Company's website https://shrirampistons.com/investors-guide-2/ under "Annual Report of Subsidiary Company" tab.

There has been no material change in the nature of the business of the Company's subsidiaries.

The Policy for determining material subsidiaries is available on the Company's Website at https://shrirampistons.com/investors-guide-2/ under "Policies" tab.

Key Business developments:

i. Technology Licensing Agreements executed by SPR EMF Innovations Private Limited (SPR-EMFI)

SPR-EMFI, a step-down subsidiary of the Company, has been leveraging its strong power electronics and motors research base and extensive semi-automated manufacturing eco-system to deliver reliable EV Motors and Controllers for green mobility solutions and various other applications. Hence, executed the following Technology Licensing Agreements for E-motors, Motor Controllers and E-drive systems for vehicle platforms with: -

Wuxi Lingbo Electronic Technology Co. for Controllers

Shenzhen Greatland Electrics Inc. for all kinds of Motors

ii. Acquisition of 62% stake in SPR Takahata Precision India Private Limited ("SPR-TPIPL")

The Company through its wholly owned subsidiary SEL had entered into a definitive agreement in the financial year 2022-23, to acquire a 75% stake in the share capital (on a fully diluted basis) of SPR-TPIPL, at an Enterprise Value of INR 2,220 Million with adjustments for debt, debt-like items and working capital to be calculated as on closing date subject to satisfactory completion of all conditions precedent.

SPR-TPIPL's existing portfolio of precision moulded parts, precision metal moulds parts and assembled parts having a variety of functional products for automotive and other Industrial applications, fits into the Company's strategy of inorganic growth alongside de-risking its current business model.

The Board of the Company in October 2023, approved the amendment to the Share Purchase Agreement (SPA) and Shareholders' Agreement (SHA) dated February 9, 2023, executed between SEL, SPR-TPIPL, and Sellers to revise the terms and obligations for the purchase of Sales Shares i.e. 75% shares in SPR-TPIPL under SPA and to incorporate certain additional rights and obligations under the SHA as under:

Purchase of 62% of the Share Capital on the closing date;

Balance 13% of the Share Capital to be acquired subject to fulfillment of customary conditions as set out in the aforesaid agreements

In October 2023, SEL acquired 62% shareholding in SPR-TPIPL and accordingly, SPR-TPIPL has become a subsidiary of SEL and a step-down subsidiary of the Company.

iii. Renewal of Technical Collaboration Agreement with KS Kolbenschmidt GmbH, Germany (KS)

During the year, the Company renewed the Technical Collaboration Agreement with KS for the next 7 years. Further, KS divested its entire shareholding of 20.32% in the Company.

Number of Meetings of the Board

During the financial year under review, seven (7) meetings of the Board of Directors were held, details of which have been provided in the Corporate Governance Report which forms part of this Annual Report as Annexure-I. The intervening gap between two meetings did not exceed 120 days, as prescribed under the Companies Act, 2013 and SEBI Listing Regulations, 2015. The Company has complied with Secretarial Standards on the meeting of Board of Directors.

Committees of the Board

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority. The following Committees constituted by the Board function according to their respective roles and defined scope: -

Audit Committee

Nomination and Remuneration Committee Corporate Social Responsibility Committee Stakeholder's Relationship Committee Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate Governance, which forms a part of this Annual Report. Further, during the year under review, all recommendations made by the various Committees have been accepted by the Board.

Audit Committee

As of 31.3.2024, members of the Audit Committee of the Company are Mr. Inderdeep Singh (Chairman), Mr. Pradeep Dinodia and Ms. Ferida Chopra.

Mr. Alok Ranjan, Non-Executive Independent Director of the Company ceased to be the director of the Company w.e.f. close of business hours of 29.3.2024 due to the completion of his tenure. Consequently, he also ceased to be a Member of the Audit Committee of the Company.

During the year, the Board has accepted all recommendations made by the Audit Committee.

Whistle Blower Policy

The Company has a Whistle Blower Policy for Directors, Employees and Stakeholders to report any kind of misuse of the Company's properties, mismanagement, or wrongful conduct prevailing/executed in the Company. As per the policy, all Whistle Blowers are granted access to the Chairman of the Audit Committee in appropriate cases.

Nomination and Remuneration Policy

The Nomination and Remuneration Committee (NRC) of the Board has formulated a Nomination and Remuneration Policy for the remuneration of Directors, Key Managerial Personnel (KMP), Senior Management Personnel (SMP) and other employees of the Company.

The Nomination and Remuneration Policy covers the criteria for the appointment of Directors (including Independent Directors), KMPs and SMPs. The Policy also covers the criteria for remuneration.

There was no change in the Policy during the year.

The level and composition of remuneration shall be reasonable and sufficient to attract, retain, and motivate Directors, KMPs, SMPs, and employees at all levels. It shall be determined taking into account the factors such as Company's performance and the remuneration structure as generally applicable in the industry.

The Directors affirm that remuneration paid to all Directors, KMPs, SMPs and all other employees is as per the remuneration policy of the Company.

The Nomination and Remuneration Policy of the Company is available on the Company's website at https://shrirampistons.com/investors-guide-2/ under "Policies" tab.

As of 31.3.2024, the number of permanent employees on the rolls of the Company is 3,887.

Performance Evaluation of the Board, its Committees, and individual Directors

According to the provisions of the Companies Act, 2013, the Board has carried out an annual performance evaluation of its performance, evaluation of the working of its Committees and the Directors individually. The manner in which the evaluation has been carried out has been explained in Report on Corporate Governance, Annexure-I to this Report.

Related Party Transactions

The Company's contracts/arrangements/transactions with related parties are in the ordinary course of business and on an arm's length basis. Thus, provisions of Section 188(1) of the Companies Act, 2013 are not applicable. During the year, the Company has not entered into any contract/arrangement/transaction with related parties that could be construed to be "material" in accordance with the "Policy for determining material Related Party Transactions" approved by the Board. Thus, there are no transactions required to be reported in Form AOC-2. Details of all transactions with related parties are given in Note No. 36 of Notes forming part of Financial Statements.

The Company has complied with the Accounting Standards, Companies Act and SEBI Listing Regulations, 2015 on Related Party Transactions.

Corporate Governance Report

Pursuant to Regulation 34 of the SEBI Listing Regulations, 2015, the Report on Corporate Governance along with the certificate from a Practicing Company Secretary certifying compliance with conditions of Corporate Governance is annexed to this Report as Annexure -1.

Management Discussion and Analysis

The Management Discussion and Analysis, as required in terms of Regulation 34(2)(e) of the SEBI Listing Regulations, 2015, forms an integral part of this Annual Report and is annexed as Annexure - II.

Conservation of Energy, Technology Absorption and Foreign Exchange Earning & Outgo

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

Particulars of Employees and Remuneration

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

Statutory Auditors

Shareholders' in their meeting held on 6.7.2023 approved the appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants (Firm's Registration No. 001076N/N500013) as Statutory Auditors of the Company for a term of five consecutive years from the conclusion of 59^th Annual General Meeting (AGM) till the conclusion of 64^th AGM to be held in 2028.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and the Companies Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors appointed Ms. Preeti Grover (FCS 5862) Company Secretary in Practice, (Proprietor M/s PG & Associates), to conduct the Secretarial Audit of the Company for the year ended March 31, 2024. The Report of the Secretarial Audit is annexed as Annexure-VI. The said Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Secretarial Audit Report of Material Unlisted Subsidiary

As per regulation 24A(1) of SEBI Listing Regulations, 2015, the Company is required to annex the secretarial audit report of its material unlisted subsidiary to its Annual Report. SPR Engenious Ltd. (SEL) has been identified as Material Unlisted Subsidiaries of the Company for FY 2023-24 and accordingly, the Company is annexing the Secretarial Audit Reports of SEL as Annexures-VII.

Internal Financial Controls and their Adequacy

The Company had appointed M/s Ernst & Young and M/s RSM Astute as its Internal Auditors for FY 2023-24, in addition to its in- house team. The Internal Control System is commensurate with the size, scale and the complexity of Company's operations. The Internal Auditors report to the Chairman of the Audit Committee.

The Internal Audit teams monitor and evaluate the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures, and policies at all locations of the Company. Based on their reports, the corrective actions in respective areas are taken to strengthen the controls and significant audit observations and corrective actions thereon are presented to the Audit Committee.

Annual Return

Pursuant to Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return for FY 2023-24 is uploaded on the website of the Company and the same is available on https://shrirampistons.com/investors-guide-2/ under "Annual Return" tab.

Furthermore, in accordance with MCA Notification dated 27^th October, 2023, the Company has designated Mr. Pankaj Gupta, Company Secretary and Compliance Officer, and in his absence, Mr. Prem Prakash Rathi, Chief Financial Officer for furnishing and extending cooperation for providing, information to the Registrar or any other authorised officer concerning beneficial interest in shares of the Company. As per said circular, details of the designated person shall be informed in the Annual Return to be filed for FY 2023-24.

Reports forming part of Boards' Report

The following reports which form an integral part of the board's report are enclosed: -

1. Report on Corporate Governance - Annexure-I

2. Report on Management Discussion and Analysis - Annexure-ll

3. Report on Conservation of Energy, Technology Absorption and Foreign Exchange Earning & Outgo - Annexure-lll

4. Data of Employees - Annexure-IV

5. Report on CSR Activities undertaken - Annexure-V

6. Secretarial Audit Report (MR-3) - Annexure-VI

7. Secretarial Audit Report of Material Unlisted Subsidiary (SEL) - Annexure-VII

8. Salient Features of Subsidiary Companies - Annexure-VIII Business Responsibility and Sustainability Report ("BRSR")

In terms of Regulation 34 of SEBI Listing Regulations, 2015, the Business Responsibility & Sustainability Report, for the financial year ended March 31, 2024, describing the initiatives taken by the Company from an environmental, social and governance perspective, forms part of this Annual Report.

Disclosures on the Company's Website

The Company is committed to good corporate governance practices and corporate social responsibility. In line with the Company's principles/commitment, the following policies/programs/reports are in place and are available on the Company's website under the link "Investors' Guide" at https://shrirampistons.com/investors-guide-2/.

1. Corporate Social Responsibility (CSR) Policy

2. Vigil Mechanism/ Whistle Blower Policy

3. Company's policy on dealing with Related Party Transactions

4. Nomination and Remuneration Policy

5. Familiarization Programmes for Independent Directors

6. Policy for distribution of Dividend

7. Policy for determination of materiality of events or information

8. Policy for determining Material Subsidiaries

9. Annual Return of the Company FY 2023-24

10. Environment Protection Policy

11. Environment Social and Governance Policy

12. Equal Opportunity for Work and Pay Policy

13. Equal Opportunity Policy

14. Fluman Rights Policy

15. Sustainable Procurement Policy

16. Sustainable Supply Chain Policy

17. Archival Policy for disclosures of Events/lnformation

18. Policy on Preservation of Documents

19. Code of Practices & Procedures for Fair Disclosure of UPSI

20. Code of Conduct for Regulating, Monitoring and Reporting of Trades by Directors, Designated Persons under the SEBI (Prohibition of Insider Trading) Regulations, 2015.

Directors' Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external agencies, including audit of internal controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during FY2023-24.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that: -

1. in the preparation of the annual accounts, the applicable Accounting Standards issued by the Institute of Chartered Accountants of India and requirements of the Companies Act have been followed and there are no material departures from the same;

2. appropriate accounting policies have been selected and applied consistently, and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as of 31^st March 2024 and the profit of the Company for the said period;

3. proper and sufficient care has been taken 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. internal financial controls are followed by the Company and such internal financial controls are adequate and operating effectively;

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

Other Disclosures:

1. There were no instances of any fraud reported by the Auditors to the Audit Committee or Board under Section 143(12) of the Companies Act, 2013.

2. No orders were passed by the Regulator(s), Court(s) or Tribunal(s) that could impact the going concern status and the Company's operations in the future.

3. There are no disqualifications, reservations, adverse remarks or disclaimers in the Statutory Auditors' and Secretarial Auditors' Report.

4. No Director of the Company is receiving commission from the Subsidiaries of the Company.

5. Particulars of Loans, Guarantees or Investments

As per Section 186, the details of loans, guarantees and investments made during FY 2023-24 are given below: -

Notes:

* During the year, the aforesaid ICD was re-paid by SEL and SPR-EMFI, hence ICD stands NIL as on March 31, 2024.

** During the year, the Board of Directors of the Company had approved providing a Corporate Guarantee on behalf of SPR-TPIPL, in favour of HDFC Bank Limited for securing the term loan facility availed by SPR-TPIPL. However, the letter of guarantee was executed on April 2, 2024.

6. The Company has complied with applicable Secretarial Standards on Board Meetings and General Meetings.

7. During the year under review, there being no transactions/event/ occasion with respect to following items and no disclosure or reporting is required in respect of the same :

i) Issue of equity shares with differential rights as to dividend, voting or otherwise;

ii) Issue of debentures, bonds or any other convertible or non-convertible securities;

iii) Issue of warrants;

iv) Failure to implement any corporate action;

v) Issue of shares (including sweat equity shares) to employees of the Company under any scheme;

vi) Buy-back of shares under Section 67(3) of the Act;

vii) Details of revision of financial statement or the Report;

viii) Amounts received from director or relative of the director;

ix) Deviation or variation in connection with certain terms of a public issue, rights issue, preferential issue, etc;

x) Company's securities were not suspended for trading during the year.

8. No application has been made or proceeding is pending against the Company under the Insolvency and Bankruptcy Code (IBC), 2016.

9. Disclosure w.r.t. difference between the amounts of the valuation executed at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with reasons thereof is not applicable.

10. As per the provisions of the Act and in compliance with Regulation 25(10) of the Listing Regulations, the Company has taken a Directors and Officers Liability Insurance (D&O Insurance) on behalf of all Directors including Independent Directors, Officers, Managers and Employees of the Company for indemnifying any of them against any liability in respect of any negligence, default, misfeasance, breach of duty or breach of trust for which they may be guilty concerning the Company.

Fixed Deposits

The Company has not renewed/accepted fixed deposits during the year. However, fixed deposits amounting to Rs. 0.16 Million accepted during the year, represent fixed deposits transferred in the name of nominee/joint holder in death cases. The fixed deposits amounting to Rs. 1.42 Million pertaining to 8 depositors remained unclaimed/ unpaid at the closing of the year. During the year, there was no default in the repayment of deposits and interest thereon. Fixed deposits accepted by the Company comply with the requirements of Chapter V of the Companies Act, 2013.

Investor Education and Protection Fund

The amount lying in unpaid dividend accounts for the last seven years is Rs. 1.23 Million. The unclaimed final dividend amount of FY 2016-17 is due to be transferred to the Investor Education and Protection Fund on 14.8.2024. The amount transferred to the Investor Education and Protection Fund during the year is Rs. 0.10 Million.

Disclosures w.r.t. shares lying in IEPF Account:

Note: The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

Disclosures w.r.t. shares lying in Suspense Account:

During the year, the Company issued 2,20,24,912 nos. bonus shares in the ratio of 1:1 to the shareholders of the Company in compliance with the provisions of the Companies Act, 2013 and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

For shareholders whose shares were held in physical form, their shares were transferred to a Suspense Account in compliance of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2018. Consequently, 3,853 equity shares are currently in the Suspense Demat Account of the Company.

Maintenance of Cost Records and Cost Audit

As per Section 148 of the Act, the Company is required to have the audit of its cost records conducted by a Cost Accountant.

The Company is maintaining the Cost Records as required under Section 148(1) of the Act. The Cost Audit Report of the Company for the year ended March 31, 2023, duly audited by Chandra Wadhwa & Co., Cost Accountants, New Delhi, was submitted to the Ministry of Corporate Affairs, Government of India on 24.8.2023, within the due date of filing the said report.

On the recommendation of the Audit Committee, Chandra Wadhwa & Co., Cost Accountants, New Delhi (Firm Registration No. 00239), has been appointed as Cost Auditors for the FY 2024-25. The remuneration payable to the Cost Auditor is subject to ratification of their remuneration by the Members at this AGM.

Details of CSR Activities undertaken by the Company

Against the requirement of Rs. 51.96 Million during the year, the Company has spent Rs. 43.32 Million on various CSR activities and an amount of Rs. 8.63 Million has been transferred to Unspent CSR Account 2023-24 which would be incurred in the following years, as per the provisions of the Companies Act, 2013. Details of initiatives taken by the Company during the year in CSR activities and composition of the CSR Committee are provided in the Report on CSR Activities undertaken by the Company in FY 2023-24, Annexure-V to this Report.

Sustainability

Being proactive, the Company released its 2^nd Business Responsibility and Sustainability Report (BRSR) under the nine principles of 'National Guidelines on Responsible Business Conduct' (NGRBC) and SEBI Guidelines, which outline the Company's sustainability performance. This is backed by the solid foundation of our integral values. The Company undertakes multiple initiatives to minimize its environmental footprint and give back to society.

Sustainability is not just a corporate responsibility but also an opportunity to create long-term value for stakeholders. The Company is committed to promoting sustainable development and making a positive contribution to society. Care for the environment is one of the core focus areas, as the Company is persistent to contribute in shaping a better future, which is safe, inclusive and sustainable.

Furthermore, the Company has designed business strategies that incorporate social well-being in everything it does. The Company is committed to reducing greenhouse gas emissions, promoting the use of renewable energy sources, implementing energy-efficient practices, exploring innovative technologies to reduce energy consumption and committed to becoming Carbon Neutral.

The Company has achieved several milestones in its ESG journey, such as having the status of zero liquid discharge, state-of-the-art ETP & STP, achieving a 20% reduction in scope II emissions, a 20% increase in the mix of renewable energy and a 30% increase in the use of recycled material.

The Company is also committed to manufacturing products that ultimately help in reducing the carbon footprint like manufacturing products specifically for CNG, ethanol blending and Hydrogen fuel applications for its customers.

Risk Management Framework

The Board of the Company has constituted a Risk Management Committee to frame, implement, monitor, review the Risk Management plan and to ensure its effectiveness. As of 31.3.2024, the Members of the Committee are Mr. Pradeep Dinodia (Chairman), Mr. Inderdeep Singh, Ms. Meenakshi Dass, Mr. Luv DeepakShriram and Mr. KrishnakumarSrinivasan.

In view of the change in industry dynamics and evolving complexity, the Company developed and implemented a Risk Management Policy including the identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company.

Through the Enterprise Risk Management Program, the Company addresses its short-term, medium-term and long-terms risks. Risk Management Committee reviews the risk(s) along with mitigation measures from time to time.

Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act)

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder. Internal Complaints Committee (ICC) is in place for all works and offices of the Company to redress complaints received regarding sexual harassment. No complaint was received/ pending under the above POSH Act during the year.

In order to ensure uniform understanding and wider coverage, awareness sessions are being organized for employees across the organization.

Secretarial Standards

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

Changes in Directors/ KMPs during the year and Appointment/ Re-appointment of Directors in the ensuing AGM

The changes are as under:

1. Mr. Sascha Putz (DIN: 08645364), Non-Executive Director of the Company, resigned w.e.f. closing hours of 30.4.2023.

2. Mr. Klaus Semke (DIN: 10133032) was appointed as Non-Executive Director w.e.f. 1.5.2023 in the casual vacancy caused pursuant to the resignation of Mr. Sascha Putz.

3. Mr. Sascha Putz (DIN: 08645364) was appointed as an Alternate Director to Mr. Klaus Semke w.e.f. 1.5.2023.

4. Mr. Sascha Putz (DIN: 08645364) ceased to be the Alternate Director to Mr. Klaus Semke (DIN: 10133032) w.e.f closing hours of 28.7.2023.

5. Mr. Alexandru Vladoi (DIN: 10381503) was appointed as Alternate Director to Mr. Klaus Semke (DIN: 10133032) w.e.f

6.11.2023.

6. Mr. Alok Ranjan (DIN: 08254398) ceased to be the Non-Executive Independent Director of the Company w.e.f. close of business hours of 29.3.2024 due to the completion of his tenure.

7. Mr. Masaaki Yamaguchi (DIN: 07106759), Non-Executive Director of the Company, resigned w.e.f. close of business hours of

31.3.2024. Consequently, Mr. Yasunori Maekawa (DIN: 06952173), alternate director to Mr. Masaaki Yamaguchi also ceased to be director of the Company with immediate effect.

8. Ms. Ferida Avnish Chopra (DIN: 08415847) was re-appointed as Non-Executive Independent Director for a second term of five (5) consecutive years commencing from 30.3.2024 to 29.3.2029.

9. Mr. Luv DeepakShriram (DIN: 00051065) was re-appointed as a Whole-time Director of the Company for a period of five (5) years effective from 5.5.2024 to 4.5.2029 as approved by the members by means of Postal Ballot.

10. Mr. Hari Shanker Bhartia (DIN: 00010499) was re-appointed as Non-Executive Independent Director for a second term of five (5) consecutive years commencing from 31.3.2025 to 30.3.2030 subject to member's approval in the ensuing AGM.

11. Mr. Shinichi Unno (DIN: 09189521) was re-appointed as Non-Executive Independent Director for a second term of five (5) consecutive years commencing from 29.7.2024 to 28.7.2029 subject to member's approval in the ensuing AGM.

12. Ms. Tina Trikha (DIN: 02778940) was appointed as Non-Executive Independent Director of the Company for five (5) years, w.e.f. 13.5.2024 up to 12.5.2029 subject to member's approval in the ensuing AGM.

13. Mr. Yasunori Maekawa (DIN: 06952173) was appointed as a Non-Executive, Non-Independent Director of the Company with effect from 13.5.2024 subject to member's approval in the ensuing AGM.

14. Mr. Krishnakumar Srinivasan's (DIN: 00692717) current term shall expire on 10.2.2025 and has been re-appointed as the MD & CEO of the Company for a period of 5 year w.e.f. 11.2.2025 to 10.2.2030, subject to the approval of Members in the ensuing AGM.

Directors Liable to Retire by Rotation

Pursuant to the provisions of Section 152 of the Companies Act, 2013, and Rules framed thereunder (including any amendment thereof), Ms. Meenakshi Dass (DIN: 00524865) Non-Executive Director, and Mr. Pradeep Dinodia (DIN: 00027995) Chairman, Non-Executive Director of the Company shall retire by rotation at the ensuing AGM and being eligible, offer themselves for reappointment. The Board recommends their re-appointment for member's approval.

A brief resume and other details of Directors seeking appointment/re-appointment are given in the Notice of the 60th Annual General Meeting of the Company.

The Board appreciated the services rendered and significant contribution to the Company of the Directors, who have ceased to be Directors during the year.

Familiarisation Programme for Independent Directors

All Independent Directors are familiarized with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The details of the familiarization programme(s) are provided in the Corporate Governance Report, which forms part of this Report and are also available on the Company's website at https://shriramDistons.com/investors-guide-2/.

Declarations from Independent Directors

In terms of Section 149 of the Act and the SEBI Listing Regulations, 2015, Mr. Hari Shanker Bhartia, Ms. Ferida Avnish Chopra, Mr. Inderdeep Singh, Mr. Shinichi Unno and Ms. TinaTrikha are the Independent Directors of the Company as on date of this Report.

All the Independent Directors of the Company have given declarations under Section 149(7) of the Act, that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(l)(b) of the SEBI Listing Regulations, 2015. In terms of Regulation 25(8) of the SEBI Listing Regulations, 2015, the Independent Directors have confirmed that they are not aware of any circumstance or situation, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence. The Independent Directors of the Company have undertaken requisite steps towards the inclusion of their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs (MCA), in terms of Section 150 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

During the year under review, Mr. Alok Ranjan ceased to be an Independent Director due to the completion of his tenure and also ceased to be the Member/Chairperson of the Committees of the Board of Directors of the Company.

In the opinion of the Board, the Independent Directors possess the requisite expertise and experience and are persons of high integrity and repute. They fulfill the conditions specified in the Act as well as the Rules made thereunder and are independent of the Management. Some of the Independent Directors are exempted from clearing the online proficiency test being conducted by the MCA and the remaining Independent Directors have cleared their online proficiency test well within prescribed timelines.

Directors and Key Managerial Personnel

During the financial year under review, there were no changes in the Key Managerial Personnel of the Company.

Accordingly, pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel (KMP) of the Company as on March 31, 2024 are Mr. Krishnakumar Srinivasan, Managing Director & CEO, Mr. Luv Deepak Shriram, Whole-time Director, Mr. Prem Prakash Rathi, Chief Financial Officer (CFO) and Mr. Pankaj Gupta, Company Secretary of the Company.

Acknowledgement

The Board of Directors wish to convey their appreciation to all of the Company's employees for their contribution towards the Company's performance. The Directors would also like to thank the collaborators, members, employee unions, customers, dealers, suppliers, bankers, governments and all other business associates for their continuous support to the Company and their confidence in its management.