Automotive Axles Ltd

To the Members,

Your Directors have the pleasure in presenting the 43^rd Annual Report on the business and operations of your Company together with the Audited Statements of Accounts for the financial period ended March 31, 2024:

Financial Highlights:

Dividend

The Board, at its meeting held on May 27, 2024, is pleased to recommend a dividend of Rs. 32/- per Equity Share of the face value of Rs. 10/- each for the financial year ended March 31, 2024 subject to the approval of shareholders at the ensuing Annual General Meeting to be held on Monday, August 5, 2024.

The total amount of Dividend aggregates to Rs. 483.58 million. The register of members and share transfer books will remain closed from July 30, 2024 to August 5, 2024 (both days inclusive) for the payment of final dividend to the shareholders of the Company, for the year ended on March 31, 2024. The Dividend will be paid to members within 30 days from the date of declaration of dividend whose names appear in the Register of Members as on July 29, 2024 and as per the Dividend Distribution Policy of the Company.

The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") is available on the Company's website at https://www.autoaxle.com/Downloads/ Dividend%20Distribution%20Policy.pdf.

Transfer of unpaid or unclaimed amount to Investor Education and Protection Fund (IEPF)

Pursuant to provisions of the Companies Act, 2013, the declared dividends, which remained unpaid or unclaimed for a period of seven years, shall be transferred by the

Company to the Investor Education and Protection Fund (IEPF) established by the Central Government.

Pursuant to Section 124(6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting , Audit, Transfer and Refund) Rules, 2016 as amended, all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more, shall be transferred by the Company to the IEPF.

Accordingly, the Company has sent notice to the respective shareholders who have not claimed their dividend for seven consecutive years or more and the newspaper advertisement stating the same has been published in the newspapers. In terms of the provisions of the Companies Act, 2013 and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 a sum of Rs. 4,04,426/- which is unpaid/unclaimed dividends pertaining to the FY 2015-16 was transferred to the Investor Education and Protection Fund during the year.

The list of equity shareholders whose shares are transferred to IEPF can be accessed on the website of the Company at below mentioned link: https://autoaxle.com/Annual_reports. aspx under the head IEPF Transfers

Performance of the Company

The total income for the financial year under review was

Rs. 22,448.83 Million as against Rs. 23,286.20 Million for the previous financial year. The Profit before tax (PBT) was

Rs. 2,229.65 Million for the financial year under review, as against Rs. 2,180.95 Million for the previous financial year.

Share Capital

The paid up Equity Share Capital as on March 31, 2024 stood at Rs. 151.12 Million. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options nor sweat equity.

Deposits

Your Company has not accepted any deposits under Chapter V of the Companies Act, 2013 during the year.

Transfer to Reserve

The company has not proposed any amount to be transferred to the General Reserves.

Listing

The equity shares of the Company are listed with BSE Limited and National Stock Exchange of India Limited. There are no arrears on account of payment of listing fees to the Stock Exchanges.

Directors & Key Managerial Personnel

As on March 31, 2024 there were six (6) Directors on the Board of your Company, consisting of three (3) Independent Directors, one (1) Executive Director and two (2) Non-Executive Directors of whom one is the Chairman.

Ms. Bijal Tushar Ajinkya (DIN : 01976832), has been appointed as an Independent Director with effect from February 11, 2024. Further, in the opinion of the Board, Ms. Bijal Tushar Ajinkya possess the requisite skills and capabilities required for the role of an Independent Director of the Company, considering her qualifications, rich experience and expertise.

Dr. Shalini Sarin (DIN: 06604529) has ceased from the position of Independent Director of the company with effect from February 12, 2024, due to completion of her term. In terms of the provisions of the Companies Act, 2013, Mr. Nagaraja Gargeshwari (DIN: 00839616), Director of the Company retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.

Below two resolutions were passed by the shareholders through postal ballot on December 25, 2023 & March 30, 2024 respectively;

1. To Approve Material Related Party Transactions of the Company with Meritor HVS (India) Limited.

2. Appointment of Ms. Bijal Tushar Ajinkya (DIN: 01976832) as Independent Director of the Company for a period of five (5) years effective February 10, 2029.

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence and that there has been no change in the circumstances which may affect their status as independent director during the year as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure requirements) Regulations, 2015. Further the names of the Independent Directors of the Company have been included in the Data bank maintained by the Indian Institute of Corporate Affairs of Independent directors as per the provisions of the Companies Act, 2013 and the rules made thereunder.

Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act. Company has received a confirmation from the Directors and senior management personnel of the company w.r.t. compliance of the code of conduct required under Regulation 26 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Board Evaluation

The Companies Act, 2013 states that a formal Annual Evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors. Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates that the Board shall monitor and review the Board evaluation framework. Pursuant to these provisions, the Company has developed a framework for the Board evaluation. The framework includes evaluation on various parameters such as information flow, Board dynamics, decision making, company performance and strategy, Board and committee's effectiveness and peer evaluation. The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board.

During the year 2023-24, Independent Directors met on January 31, 2024, discussed and reviewed the below:

• Performance of Non Independent Directors;

• Performance of the Chairman;

• Performance of the Board Committees;

• Discussed on the quality, quantity and timeliness of flow of information between the Company management and the Board Members;

• Overall performance of the Company;

The Nomination and Remuneration Committee is responsible for the formulation of criteria for evaluation.

Familiarization program for the Board Members

Your Company has in place a structured induction and familiarization program for all its directors including Independent Directors and new appointee(s) to the Board. Through such programs, the Directors are briefed on the background of your Company, their roles, rights, responsibilities, nature of the industry in which it operates, business model operations, ongoing events etc.

The Board members are provided with the necessary documents, brochures, reports and internal policies to enable them to familiarize with the Company's procedure and practice.

Periodic presentations are made at the Board Meetings, Board Committee Meetings and Independent Directors Meetings on business and overall performance updates of the Company, business strategy and risk involved.

The details of programs for Familiarization for Independent Directors are posted on the website of the Company and can be accessed at below weblink: https://www.autoaxle.com/Downloads/Familiarisation%20 Programme%20for%20Independent%20Directors%20 of%20Automotive%20Axles%20Limited-23-24.pdf

Directors' Responsibility Statement

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, your Directors make the following statements: (a) in the preparation of the annual accounts for the year ended March 31, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures if any; (b) we have 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 as at March 31, 2024 and of the profit of the company for the year ended on that date; (c) we have taken proper and sufficient care 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; (d) we have prepared the annual accounts on a going concern basis; (e) we have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; (f) we have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

a. Statutory auditor

M/s. S R Batliboi & Associates LLP, Chartered Accountants [Firm Registration No.: 101049W/ E300004] are holding the position of Statutory Auditors of the Company.

The Auditors' Report does not contain any qualification, reservation or adverse remarks.

Further, no frauds have been reported by the Auditors in their reports.

b. Internal Auditor

On recommendation of the Audit Committee the Board of Directors approved the appointment of M/s PriceWaterhouse Coopers Services LLP as Internal Auditors of the Company for the Financial Year 2023-24. The internal auditors conducted the audit as per the terms of reference by the Audit Committee which has reviewed the reports and the action taken by the Company for streamlining the gaps identified by the auditors.

c. Secretarial Auditor

Pursuant to the provisions of the Section 204 of the Companies Act, 2013 and the rules made there under and based on the recommendations of the Audit Committee, CS Pracheta M, Practicing Company Secretary had been appointed to conduct Secretarial Audit of the Company's secretarial and other related records for the financial year 2023-24.

The Secretarial Audit Report for the financial year ended March 31, 2024 in Form MR-3 is appended to this report under Annexure – A.

Explanation for observations made under Secretarial Audit Report

This was a first time violation by one of our employee and his relative and was done inadvertently. Warning issued to the employee considering the amount involved and the employee had also transferred the profit of Rs. 8,489/- earned on the transaction to the SEBI-IEPF account. Going forward we will strengthen our reporting mechanism.

Internal Financial Controls

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

Corporate Governance

Corporate Governance is about maximizing the value and to ensure fairness to all its shareholders. Your Company is renowned for its exemplary governance standards and believes that sound corporate governance is critical to enhance and retain investor trust. Your Company ensures that performance is driven by integrity.

The Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 have strengthened the governance regime in the country and your Company is in compliance with the governance requirements provided under the law both in letter and spirit. The Board also exercises its fiduciary responsibilities in the widest sense of the term.

Your Company has in place all the statutory committees required under the law. Details of the Board Committees along with their terms of reference, composition and meeting of the Board and its Committees held during the year are provided in the Corporate Governance Report which is presented in a separate section forming part of the Annual Report.

A Certificate from CS Pracheta M., Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Regulation 34(3) Schedule V (E) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to the Corporate Governance Report.

Meetings of the Board

During the financial year, the Board met four times, details of which are provided in the Corporate Governance Report. The maximum interval between any two meetings did not exceed 120 days as prescribed under the Companies Act, 2013.

Committees of the Board

Your Company has the following committees which have been established as a part of the corporate governance practices and are in compliance with the requirements of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015.

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

• Risk Management Committee

The details with respect to the compositions, roles, and number of meetings held during the year is detailed in the corporate governance report of the Company, which forms a part of this Board's Report.

All the recommendations by any of the above Committees are accepted by the Board and there are no recommendations which the Board has not accepted.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are appended as Annexure - B to this report.

Particulars of Remuneration of Directors & certain specified employees

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, the ratio of remuneration of each Director to the median of the employees' remuneration, a statement containing the names of top ten employees in terms of remuneration drawn and every employee who is employed throughout the financial year and was in receipt of a remuneration of Rs. 102 Lakhs per annum or more and of every employee who is employed part of the financial year, was in receipt of remuneration of Rs. 8.50 Lakhs or more per month is appended as Annexure - C.

Annual Return 2023-24

The copy of Annual Return for the financial year ending March 31, 2024- is available at https://www.autoaxle.com/ Annual_Return.aspx.

Particulars of Loans, Guarantees or Investment under Section 186 of the Companies Act, 2013

Particulars of loans covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statement provided in this Annual Report. These loans are primarily granted for furtherance of business of the borrowing companies.

Your Company has not given any guarantee or provided any security in connection with a loan to any other body corporate or persons.

The company has made investment of Rs. 27,99,500/- during the FY 2023-24 in Torrent Surya Urja 3 Private Limited to acquire 2,79,950 number of Equity Shares of Rs. 10/- each, constituting 26% of total equity shareholding as per Share Subscription and Shareholder's dated April 13, 2023 and amendment to the Share Subscription and Shareholder's Agreement on December 8, 2023 entered into with Torrent Surya Urja 3 Private Limited out of the total agreed amount of investment of Rs. 4,14,65,590/-, to comply with regulatory requirements of the Electricity Act, 2003 read with Electricity Rules, 2005 to procure Solar Power. Particulars of Investment made by the company form part of the notes to the financial statement provided in this Annual Report.

Policy on Directors' Appointment & Remuneration

The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board and separate its functions of governance and management. On March 31, 2024, the Board consist of six members, one of whom is executive or whole-time director, two are non executive directors and three are independent directors out of whom one is an Independent Woman Director.

The Nomination and Remuneration Policy of the Company has been formulated in accordance with the Act and Listing Regulations. The Policy is designed to guide the Board in relation to appointment and removal of directors, Key Managerial Personnel and Senior Management and recommend to the Board on remuneration payable to them. Policy enables the Company to retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage. The current policy is available on Company's website at https://www.autoaxle.com/Investor_Policy.aspx. There has been no changes to the policy during the financial year.

Particulars of contracts or arrangements with Related Parties (RPT)

The related party transactions that were entered into during the financial year were in the ordinary course of business and on the arm's length basis.

All related party transactions are placed before the Audit Committee and also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions, which are foreseen and of repetitive nature.

Further, all transactions entered into pursuant to the omnibus approval so granted are reviewed and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their review on a quarterly basis.

For transactions with Meritor HVS (India) Limited, the Company has obtained shareholders' approval:

1. At their 37^th Annual General Meeting held on August 13, 2018 for annual transaction value of Rs. 30,000 Million for a period of five (5) financial years starting from April 1, 2019 and ending on 31^st March 2024

2. By passing special resolution through Postal Ballot on December 26, 2023 for transaction value of Rs. 40,000 Million for the Financial Year 2024-2025.

In accordance with the requirements of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has formulated a Policy on Related

Party Transactions which is also available on Company's website at https://www.autoaxle.com/Investor_Policy.aspx Related Party disclosures as per Indian Accounting Standards (Ind AS) -24 have been provided in Note No. 36 to the financial statement.

The particulars on RPTs in Form AOC - 2 is annexed to the Report as Annexure – D.

Risk Management System

The Company has a robust risk management framework comprising risk governance structure and defined risk management processes. These processes include the development and implementation of a risk management policy for the company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company. The risk governance structure of the Company is a formal organisation structure with defined roles and responsibilities for risk management. The processes and practices of risk management of the Company encompass risk identification, classification and evaluation. The Company identifies all strategic, operational and financial risks that the Company faces, by assessing and analysing the latest trends in risk information available internally and externally and using the same to plan for risk activities.

The Company has set up a Risk Management Committee to review the risks faced by the Company and monitor the development and deployment of risk mitigation action plans and the status is updated to the members of the Audit Committee and the Board of Directors on quarterly basis.

Corporate Social Responsibility (CSR)

The Company has been carrying out various Corporate Social Responsibility (CSR) activities. These activities are in terms of Section 135 read with Schedule VII of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 read with CSR policy of the Company. During the year the Company has spent Rs. 20.07 Million on various CSR activities including the excess spent of previous year of Rs. 0.07 Million.

The Annual Report on CSR activities that includes details about the CSR policy developed and implemented by the Company and CSR initiatives taken during the year is appended to the Report as Annexure – E.

State of Company's Affairs

Discussion on the state of the Company's affairs has been covered as part of the Management Discussion and Analysis (MDA). MDA for the year under review, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.

Management Discussion and Analysis Report

Pursuant to Regulation 34(2)(e) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.

Business Responsibility & Sustainability Report

A detailed Business Responsibility & Sustainability Report in terms of the provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available as a separate section in the Annual Report.

Vigil Mechanism

Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors has formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 22 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Under the policy, the Directors and employees are free to report any violation of the applicable laws and regulations and the code of conduct of the Company. The reportable matters are to be disclosed to the Audit Committee. During the year under review, the Company has not received any complaints under the said mechanism.

Whistle Blower Policy of the Company can be accessed at below weblink: https://www.autoaxle.com/Downloads/Whistle%20 Blower%20Policy.pdf

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

Your Company has always believed in providing a safe workplace for every individual working in Company's premises through various interventions and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.

In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a Policy to prevent Sexual Harassment of Women at Workplace. The Company has also constituted Internal Committee, as required under the said enactment. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Significant or Material Orders

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

Material Changes and Commitments, if any, affecting the Financial Position of the Company

There were no adverse material changes or commitments occurred after March 31, 2024 which may affect the financial position of the Company or may require disclosure.

Subsidiaries, Joint Ventures and Associates

Your Company does not have any subsidiary, joint venture. I. Company has made investment of Rs. 27,99,500/- during the FY 2023-24 in Torrent Saurya Urja 3 Private Limited to acquire 2,79,950 number of Equity Shares of Rs. 10/- each, constituting 26% of total equity shareholding as per Share Subscription and Shareholder's Agreement entered into with Torrent Saurya Urja 3 Private Limited on April 13, 2023, and amendment thereto on December 8, 2023 to comply with regulatory requirements of the Electricity Act, 2003 read with Electricity Rules, 2005 to procure Solar Power.

II. Company has made investment of Rs. 2,50,00,000/- during the FY-2022-23 in Parola Renewables Private Limited to acquire 25,00,000 number of Equity Shares of Rs. 10/- each, constituting 26% of total equity shareholding as per Share Subscription and Shareholder's Agreement entered into with Parola Renewables Private Limited on February 7, 2022, to comply with regulatory requirements of the Electricity Act, 2003 read with Electricity Rules, 2005 to procure Solar Power.

Hence 26% voting interest is a mere requirement of the regulators, and the Company doesn't have any significant influence on Torrent Saurya Urja 3 Private Limited and Parola Renewables Private Limited and therefore Torrent Saurya Urja 3 Private Limited and Parola Renewables Private Limited doesn't qualify as an associate of the Company as per IND AS 28.

Change in the nature of business

There is no change in the nature of business of your Company.

Secretarial Standards:

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.

Awards and Recognition

During FY 2023-24, your company received recognitions from the following bodies/customers as listed below:

1. Successfully achieved TPM Excellence Category A Award-2023 after completing First Stage Assessment on July 14, 2023, and Second Stage Assessment on January 8, 2024. Honored at the ceremony held in Kyoto, Japan on March 20, 2024.

2. Recognised as the ‘Supplier Samrat Regional Competition Runner-up' by Ashok Leyland.

3. Received Gold Award for Best Performance in ESG from Ashok Leyland

4. Secured 20 Gold Awards and 1 Silver Award at the Mysuru Chapter Convention on Quality Concept-CCQC Kaizens competition organised by Quality Forum of India-QCFI (CCQC-2023).

5. Received 5 Excellence Awards in the NCQC-2023 Allied Case Study Presentation competition during the National Convention on Allied Concepts.

6. Received Gold Awards with 2 teams in the ICQCC-2023 Allied Case Study Presentation competition at the International Convention on Allied Concepts.

Maintenance of Cost records

The maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is required by the Company and accordingly such accounts and records are made and maintained.

Other Disclosure

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

As the company has not made any one time settlement with any banks or financial institution during the year under review, Rule (8) sub-rule (5) clause (xii) of Companies (Accounts) Rules,2014 is not applicable.

Acknowledgements

Your Directors wish to convey their gratitude and place on record their appreciation for the employees at all levels for their hard work, cooperation and dedication during the year. Your Directors sincerely convey their appreciation to customers, shareholders, bankers, business associates, regulatory and government authorities for their continued support. Your Directors wish to place on record their appreciation for the continued co-operation and support extended by Kalyani Group, Pune, and Meritor Inc., USA.