Varroc Engineering Ltd

Dear Shareholders,

The Directors of your Company take pleasure in presenting the 37th Annual Report on the business and operations of Varroc Engineering Ltd. ("the Company") together with the summary of standalone and consolidated financial statements for the year ended March31, 2025.

The Audited Financial Statements of your Company as on March31, 2025, are prepared in accordance with the relevant applicable Indian Accounting Standards ("Ind AS") and Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and the provisions of the Companies Act, 2013 ("Act"). The summarised financial highlight is depicted below:

Key highlights of consolidated and standalone financial performance for the year ended March31, 2025 and March31, 2024 are summarised as under: in Million) (H

The detailed State of Company's Affairs have been outlined in Management Discussion and Analysis Report, which forms part of this Annual Report.

We are pleased to report the successful resolution of a long-standing joint venture dispute involving our wholly owned subsidiary, VarrocCorp Holding B.V. ("VCHBV"), and its joint venture partner, BESTE Motor Co. Ltd. ("TYC").

Following breaches by TYC of the shareholders' agreement and related governance documents, VCHBV initiated arbitration proceedings through the International Chamber of Commerce, Singapore. The tribunal issued an award on December 11, 2024 requiring VCHBV to transfer its 50% shareholding in Varroc TYC Corporation, British Virgin Islands (and consequently, its interest in the JV subsidiaries) to Beste Motors Co. Ltd., British Virgin Islands, for a consideration of RMB 310.50 million less applicable withholding tax, within 45 days of the date of Award.

To enforce this award, VCHBV initiated proceedings in the British Virgin Islands (BVI), where the joint venture holding company is based. On April 17, 2025, the BVI Court upheld the arbitration award, directing TYC to acquire VCHBV's 50% stake in the joint venture holding company, Varroc TYC Corporation, for RMB 310.50 million (subject to applicable withholding tax), and to reimburse VCHBV's legal costs.

On May 07, 2025, VCHBV received the consideration amount and completed the transfer of its stake in Varroc TYC Corporation, thereby exiting the joint venture, including its interests in the underlying Chinese operating companies.

This outcome represents a positive development for the Company, unlocking value from its asset and reinforcing our focus on streamlining operations and strengthening our core businesses.

We are pleased to inform shareholders that the Hon'ble National Company Law Tribunal (NCLT), Mumbai Bench, vide its Order dated January 10, 2025, has approved the Scheme of Amalgamation for the merger of Varroc Polymers Ltd. ("VPL"), a wholly owned subsidiary, with the Company under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013.

Following this approval, the certified copy of the NCLT Order was filed by VPL and the Company with the Registrar of Companies, Mumbai, on January 31, 2025, and February 1, 2025, respectively, thereby making the Scheme effective. As per the terms of the Scheme, all assets, liabilities, and obligations of VPL have been transferred to and now form part of the Company with effect from the Appointed Date, i.e., April 1, 2024.

This strategic amalgamation is expected to enhance operational efficiencies, streamline the corporate structure, and contribute to improved synergies across our business operations. The merger has been accounted as business combination of entities under common control as per Appendix C to Ind AS 103 - Business Combinations. Accordingly, the comparative period for the year ended March31, 2024 presented in the financial statements has been restated to include the effects of this merger.

The Credit rating of the Company is managed by India Ratings and Research Limited [‘Ind-Ra']. During the year under review, Your Company's rating has been upgraded i.e. long-term loans rating including NCD was at ‘IND AA-/Stable'. The rating on the Company's short-term bank facilities and commercial paper programme has also been upgraded at ‘IND A1+'. This indicates the Company's good financial health and its ability to meet financial obligations.

The Board of Directors is pleased to recommend a dividend of RS. 1/- per share (100%) for the year ended March31, 2025. The dividend is subject to approval of shareholders at the ensuing Annual General Meeting (AGM) and shall be subject to deduction of tax at source. The dividend, if approved by the shareholders, would involve a cash outflow of RS. 152.79 million.

The dividend recommended is in accordance with your Company's Dividend Distribution Policy. The Dividend Distribution Policy, is available on the Company's website URL: https://www.varroc.com/upload/financial_ results/1706864856652337785.pdf

Details of outstanding and unclaimed dividends previously declared and paid by the Company are given under the Corporate Governance Report which forms part of this Annual Report.

As required under Section 124 of the Act, no Unclaimed Dividend/ Debenture redemption/ Debenture Interest has been lying with the Company for a period of seven years. Accordingly, no amounts have been transferred to the Investor Education and Protection Fund established by the Central Government.

As required under Section 124 of the Act, no equity shares, in respect of which dividends have not been claimed by the members for seven consecutive years or more, have been transferred by the Company to the Investor Education and Protection Fund Authority (IEPF) during the Financial Year 2024-25.

As permitted under the Act, the Board does not propose to transfer any amount to General Reserves. The closing balance of the retained earnings of your Company for FY 2024-25, after all appropriations and adjustments, was RS. 1,467.18 million.

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

During the year under review, there has been no change in the registered office of the Company.

In accordance with the Scheme of Amalgamation of Varroc Polymers Limited ("VPL") with Varroc Engineering Limited and their respective Shareholders, upon the Scheme becoming effective from February 01, 2025, the Authorised Share Capital of the Company stands increased from RS. 50,45,00,000 to RS. 55,94,00,000 and accordingly, the Clause V(1)(a) of the Memorandum of Association has been substituted as under: The Authorised Share Capital of the Company is:- RS. 55,94,00,000/- (Rupees Fifty-Five Crores Ninety Four Lakhs only) comprising of:

RS. 25,45,00,000 (Rupees Twenty-Five Crore Forty Five Lakhs only) divided into 25,45,00,000 Equity Shares of RS. 1/- each;

RS. 5,49,00,000 (Rupees Five Crore Forty Nine Lakhs only) divided into 54,90,000 Equity Shares of RS. 10/- each; and

RS. 25,00,00,000 (Rupees Twenty-Five Crores only) divided into 25,00,00,000 Preference Shares of RS. 1/- each

Further, the Board of Directors at their meeting held on May 29, 2025 approved and has resolved to seek approval from the shareholders at the ensuing Annual General Meeting, for re-classification of Authorised Share Capital of RS. 5,49,00,000/- divided into 54,90,000 equity shares having face value of RS. 10/- each into 5,49,00,000 equity shares having face value of RS. 1/- each and consequent amendment to Memorandum of Association of the Company.

During the year under review, there was no change in the paid-up share capital of the Company. The paid-up equity share capital of the Company as on 31st March2025 is RS. 15,27,86,400 comprising of 15,27,86,400 equity shares of RS. 1/- each. During the year, the Company has not issued any shares or convertible securities. Presently, the Company does not have any scheme for the issue of shares, including sweat equity to the Employees or Directors of the Company.

The Company is compliant with the minimum public shareholding requirements. The breakup of Promoter and Public Shareholding of the Company post aforesaid sale of shares is provided below:

During the Financial Year 2023-24, the Company had issued 25,000 Rated, Listed, Senior, Secured, Redeemable, Taxable, Transferable, Non-Convertible Debentures of RS. 1 Lakh each aggregating to RS. 2,500 million bearing coupon rate of 8.60% on September 7, 2023 (Date of Allotment), which will be due for redemption on September 7, 2028, with the tenure of 5 years from the date of Allotment with equal quarterly amortization starting from end of 15 months from the date of Allotment and coupon payments to be made on quarterly basis. During the year under review, the Company has not issued any Debentures.

Pursuant to the provisions of the Companies Act, 2013, approval of the members is sought at the ensuing annual general meeting for alteration of Object clause of Memorandum of Association of the Company.

There have been no material changes or commitments that have affected the financial position of the Company between the close of FY 2024-25 and the date of this report.

There were no outstanding deposits within the meaning of Section 73 and 74 of the Act read with rules made thereunder at the end of FY 25 or the previous financial years. Your Company did not accept any deposit during the year under review.

The details of loans, guarantees and investments covered under the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the Notes to the Financial Statements.

A list of subsidiaries/joint ventures of your Company is provided as part of the notes to the consolidated financial statements. During the year under review, the Company has incorporated the following entity as second level step down subsidiary:

Varrec (Thailand) Co., Ltd.

Pursuant to the provisions of Section 129, 134 and 136 of the Act read with rules made thereunder and Regulation 33 of the SEBI Listing Regulations, your Company has prepared consolidated financial statements of the Company and a separate statement containing the salient features of financial statement of subsidiaries, joint ventures and associates in Form AOC-1, which forms part of this Annual Report.

Further, pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company and separate audited financial statements in respect of subsidiaries are available on the website of the Company https://varroc.com/investors/financial-results/

The Company has formulated a policy for determining Material Subsidiaries. The policy is available on your Company's website and link for the same is https://www.varroc.com/upload/financial_results/1738746014363053111.pdf.

During the year under review, Varroc Polymers Limited ceases to be a material subsidiary of the Company pursuant to its amalgamation with the Company. Pursuant to the Section 134 of the Act read with rules made thereunder, the details of developments at the level of subsidiaries and joint ventures of your Company are covered in the Management Discussion and Analysis Report, which forms part of this Annual Report.

As of March31, 2025, your Company's Board had nine members comprising of one Non-Executive Non-Independent Director related to Promoter, Three Executive Directors and Five Non-Executive Independent Directors including Two Woman Directors. The details of Board and Committee composition, tenure of directors, and other details are available in the Corporate Governance Report, which forms part of this Annual Report. In terms of the requirement of the Listing Regulations, the Board has identified core skills, expertise, and competencies of the Directors in the context of the Company's business for effective functioning. The key skills, expertise and core competencies of the Board of Directors are detailed in the Corporate Governance Report, which forms part of this Annual Report

Mr. Tarun Tyagi (DIN 10204986), Wholetime Director and Occupier of the plants of the Company resigned from directorship of the Company with effect from November 13, 2024. The Board had expressed its sincere gratitude and placed on record its appreciation of their significant contribution during his tenure as Director of the Company.

The shareholders at their 36th Annual General Meeting held on September 12, 2024 re-appointed Mr. Arjun Jain (DIN: 07228175) and Mr. Dhruv Jain (DIN: 09710448), who were retiring by rotation.

The Board of Directors based on the recommendation of the Nomination and Remuneration Committee and in terms of Article 23 (l) of the Articles of Association of the Company and Section 161(1) of the Act in its meeting held on November 13, 2024 appointed Mr. Vidyadhar Limaye (DIN 06720053) as an Additional Director of the Company, in the category of Executive/Non-Independent Director. Further, the shareholders through special resolution passed by way of postal ballot on December 18, 2024, appointed him as a wholetime Director, liable to retire by rotation, for a period of (3) three years commencing from November 13, 2024 to November 12, 2027.

The Board of Directors based on the recommendation of the Nomination and Remuneration Committee and in terms of Article 23 (l) of the Articles of Association of the Company and Section 161(1) of the Act in its meeting held on March27, 2025 appointed Mrs. Liselott Kilaas (DIN - 10953529) as an Additional Director of the Company, in the category of Independent Director. Further, the shareholders through special resolution passed by way of postal ballot appointed her as an Independent Director, not liable to retire by rotation, for a period of 5 (Five) years commencing from March27, 2025 to March26, 2030.

The Board of Directors based on the recommendation of the Nomination and Remuneration Committee and in terms of Article 23 (l) of the Articles of Association of the Company and Section 161(1) of the Act in its meeting held on 29.05.2025 appointed Mr. Akshaykumar Chudasama (DIN 00010630) as an Additional Director of the Company, in the category of Independent Director. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors have recommended to the members of the Company the appointment of Mr.

Akshaykumar Chudasama as an Independent Director for a period of 5 (Five) years, as mentioned in the notice convening the 37th AGM of the Company, through special resolution.

The Board of Directors based on the recommendation of the Nomination and Remuneration Committee and in terms of Article 23 (l) of the Articles of Association of the Company and Section 161(1) of the Act in its meeting held on 29.05.2025 appointed Mr. Dhruv Jain (DIN: 09710448) as Wholetime Director of the Company. Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors have recommended to the members of the Company the appointment of Mr. Dhruv Jain as Wholetime Director for a period of 3 (Three) years, as mentioned in the notice convening the 37th AGM of the Company, through special resolution.

In accordance with the provisions of Section 152 of the Act, read with rules made thereunder and Articles of Association of your Company, Mr. Tarang Jain (DIN 00027505) and Mr. Dhruv Jain (DIN: 09710448) liable to retire by rotation at the ensuing AGM and being eligible, offers themselves for reappointment. The Board recommends the re-appointment of Mr. Tarang Jain and Mr. Dhruv Jain as Director for your approval. Brief details as required under Secretarial Standard-2 and Regulation 36 of SEBI Listing Regulations, are provided in the Notice of AGM.

The Company has received declarations from all the Independent Directors of your Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 16(1) (b) of the SEBI Listing Regulations and there has been no change in the circumstances which may affect their status as an Independent Director. The Independent Directors have also given declaration of compliance with Rules 6(1) and 6(2) of the Companies (Appointment and Qualification of Directors) Rules, 2014, with respect to their name appearing in the data bank of Independent Directors maintained by the Indian Institute of Corporate Affairs.

In the opinion of the Board, all Independent Directors possess requisite qualifications, experience, expertise and hold high standards of integrity required to discharge their duties with an objective independent judgment and without any external influence. List of key skills, expertise and core competencies of the Board, including the Independent Directors, forms a part of the Corporate Governance Report of this Annual Report.

In terms of the provisions of Section 203 of the Act, as on March31, 2025, the Company has the following Key Managerial Personnel:

(a) Mr. Tarang Jain, Chairman & Managing Director (b) Mr. Arjun Jain, Whole-time Director (c) Mr. Vidyadhar Limaye, Whole-time Director (d) Mr. K. Mahendra Kumar, Group Chief Financial Officer

(e) Mr. Ajay Sharma, Group General Counsel and Company Secretary

Your Company has duly constituted the Committees required under the Companies Act, 2013 read with applicable Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Details of all the committees such as terms of reference, composition, and meetings held during the year under review are disclosed in the Corporate Governance Report, which forms part of this Annual Report.

The Board of Directors at their meeting held on May 29, 2025, re-constituted the following committees:

Audit Committee

Nomination & Remuneration Committee

Stakeholder Relationship Committee

Risk Management Committee

Corporate Social Responsibility

Environment, Social and Governance (ESG) Steering Committee

The details of the above said committees are available on the website of the Company and link for the same is https://www.varroc.com/investors/board-of-directors-committees.

The Board met 5 (Five) times during the year under review. The intervening gap between the meetings did not exceed 120 days, as prescribed under the Act and SEBI Listing Regulations. The details of board meetings and the attendance of the Directors are provided in the Corporate Governance Report, which forms part of this Annual Report.

As on March31, 2025, the Committee comprises of four directors viz:

1) Mr. Gautam Khandelwal, Chairman

2) Mr. Tarang Jain

3) Mrs. Vijaya Sampath

4) Dr. Vinish Kathuria

The Board of Directors at their meeting held on May 29, 2025, re-constituted the Committee and the details of the same are as under:

1) Dr. Vinish Kathuria, Chairman

2) Mrs. Liselott Kilaas

3) Mr. Akshaykumar Chudasama

4) Mr. Tarang Jain

All the Members of the Committee possess strong accounting and financial management knowledge. All the recommendations of the Audit Committee were accepted by the Board during the financial year under review.

The performance of the Board was evaluated by the Board Members after seeking inputs from all the Directors on the basis of criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the Committee(s) was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.

The above criteria are based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India. In a separate meeting of Independent Directors held on May 17, 2024, the performance of Non-Independent Directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of Executive Directors and Non-Executive Directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of criteria such as the contribution of the individual Director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution, inputs in meetings, etc.

In the Board meeting that followed the meeting of the Independent Directors and meeting of Nomination and Remuneration Committee, the performance of the Board, its Committees and Individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated. The suggestions were considered by the Board to optimise the effectiveness and functioning of the Board and its committees.

The Board is regularly updated on changes in statutory provisions, as applicable to the Company. The Board is also updated on the operations, key trends and risk universe applicable to the Company's business. These updates help the Directors to keep abreast of key changes and their impact on the Company.

Pursuant to Section 178(3) of the Act, the Company has framed a policy on Directors' appointment and remuneration and other matters ("Remuneration Policy") which is available on the website of the Company and link for the same is https://www.varroc.com/upload/financial_results/17068646041473196366.pdf

The Remuneration Policy for selection of Directors and determining Directors' independence sets out the guiding principles for the NRC for identifying the persons who are qualified to become the Directors. Your Company's Remuneration Policy is directed towards rewarding performance based on review of achievements. The Remuneration Policy is in consonance with existing industry practice. We affirm that the remuneration paid to the Directors is as per the terms laid out in the Remuneration Policy.

Your Company recognises and embraces the importance of a diverse board in its success. The Board has adopted the Board Diversity Policy which sets out the approach to the diversity of the Board of Directors. The said Policy is available on your Company's website and link for the same is https://www.varroc.com/upload/financial_results/17068646041473196366.pdf.

Your Company has an effective mechanism for succession planning which focuses on orderly succession of Directors, Key Management Personnel, Senior Management and other employees. The said Policy is available on your Company's website and link for the same is https://www.varroc.com/upload/financial_results/17371208591189311422.pdf.

Pursuant to Section 134(5) of the Act, the Board, to the best of their knowledge and based on the information and explanations received from the management of your Company, confirm that:

a. in the preparation of the Annual Financial Statements, the applicable accounting standards have been followed and there are no material departures;

b. they have selected such accounting policies and applied them consistently and judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual financial statements have been prepared on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

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

The details with respect to internal financial controls and their adequacy are included in the Management Discussion and Analysis Report, which forms part of this Annual Report.

Risk Management Framework which provides a process of identifying, assessing, monitoring, reporting, and mitigating various risks at all levels at periodic intervals. Under the framework, the Company has constituted a Risk Management Committee to continuously monitor, report and mitigate various risks faced. The outcome of this process is reported to the Audit Committee and the Board of Directors at regular intervals.

The Risk Management Policy is available on your Company's website and link for the same is https://www.varroc.com/ upload/financial_results/1706864725414838139.pdf

The details of various policies approved and adopted by the Board as required under the Act and SEBI Listing Regulations are available on the Company's website on the link https://www.varroc.com/investors/corporate-governance.

The Management Discussion and Analysis Report for the year under review, as stipulated under the SEBI Listing Regulations, is presented in a section forming part of this Annual Report.

Your Company has taken adequate steps to ensure compliance with the provisions of Corporate Governance as prescribed under the Listing Regulations. A separate section on Corporate Governance, forming a part of this Report, and the requisite certificate from M/s Uma Lodha & Co., Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance, is attached to the report on Corporate Governance.

The Chairman and Managing Director and Group Chief Financial Officer have certified to the Board with regard to Financial Statements and other matters as required under Regulation 17(8) read with Schedule II to the Listing Regulations.

In accordance with the SEBI Listing Regulations, the BRSR for the FY 2024-25, describing the initiatives taken by your Company from an environment, social and governance (ESG) perspective, forms part of this Annual Report. In addition to BRSR, the Annual Report of the Company provides an insight on various ESG initiatives adopted by the Company.

As required under Sections 92(3) and 134(3)(a) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 (as amended), Annual Return in Form MGT - 7 is available on Company's website at the link https://www.varroc.com/upload/financial_results/17361695421890254112.pdf.

All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval from Audit Committee is obtained for the related party transactions which are repetitive in nature. All transactions with related parties entered into during the year under review were at arm's length basis and in the ordinary course of business and in accordance with the provisions of the Act and the rules made thereunder, the SEBI Listing Regulations and your Company's Policy on Related Party Transactions. The Audit Committee comprise of the Independent Directors and Executive Director of your Company. The members of the Audit Committee abstained from discussing and voting in the transaction(s) in which they were interested. During the year, your company has not entered into any transactions with related parties which could be considered material in terms of Section 188 of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act, in Form AOC 2, is not applicable.

Your Company did not enter any related party transactions during the year under review, which could be prejudicial to the interest of minority shareholders. The Policy on Related Party Transactions is available on your Company's website and can be accessed using the link https://www.varroc.com/upload/financial_results/1743067406881274532.pdf.

Pursuant to the provisions of Regulation 23 of the SEBI Listing Regulations, your Company has filed half yearly reports to the stock exchanges, for the related party transactions.

The shareholders of the Company at the 35th AGM held on September 13, 2023, approved the re-appointment of SRBC & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 301003E/IE300005), as the Statutory Auditors of the Company for a second term of five consecutive years to hold the office till the conclusion of 40th AGM to be held in the year 2028.

The Auditor's report for FY 2024-25 on the consolidated financial statements of the Company contains the following qualifications:

As disclosed in note 50 to the consolidated financial statements, the financial results and other financial information for the year ended March31, 2025 in respect of Varroc TYC Corporation BVI ("China JV"), a joint venture accounted for under the equity method, considered for the purpose of preparation of the consolidated financial statements, is unaudited. Hence, we are unable to determine the impact of Group's share of profit/ loss from China JV and of the impairment loss recognised for China JV on the consolidated profit/loss before tax, profit/loss after tax, total comprehensive income and earnings per share for the year ended March31, 2025 and Group's share of net assets of China JV on the investment in China JV as at March31, 2025, had the financial results/ other financial information of China JV been audited.

The Group's share of net profits of VTYC of RS. 27.85 million (approx. 1.65% of Profit/(loss) before tax) which is included in the Group's consolidated profits is based on management certified accounts and was not subjected to audit. Due to the ongoing arbitration as explained below, the Group was unable to get the financial and other information of VTYC audited from auditors.

On December 11, 2024, the Group received an order from the International Chamber of Commerce, Singapore ('ICC') in respect of the ongoing arbitration between VarrocCorp Holding B.V. ('VCHBV') jointly with Varroc Engineering Limited and Beste Motor Co. Ltd. ('TYC BVI Entity') jointly with TYC Brother Industrial Co. Ltd ('TYC Group') and Varroc TYC Corporation ('VTYC' or 'China JV'), wherein VCHBV has been directed to transfer its 50% shareholding in VTYC to TYC BVI Entity for a consideration of RMB 310.50 million.

Subsequent to the year end, the Group has received above consideration on May 07, 2025 and transferred its investments in China JV.

Apart from the above, there are no further qualifications, reservations, or adverse remarks on the financial statements for the year ended March31, 2025. The notes on the financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditor's Report is enclosed with the financial statements.

The total fees for all the services paid by the Company and its subsidiaries, on a consolidated basis, to the statutory auditor, and all entities in the network firm/network entity of which the statutory auditor is a part, is given below:

The Board had appointed M/s S. R. Bhargave & Co., Cost Accountants, Pune (Firm Registration No. M – 000218), as Cost Auditor for conducting the audit of Cost Records of the Company for Financial year ended 31st March, 2025.

In accordance with Section 148 of the Companies Act, 2013, based on the recommendation of the Audit Committee, the Board of Directors of the Company, at their meeting held on May 29, 2025, re-appointed M/s S. R. Bhargave & Co., Cost Accountants, Pune (Firm Registration No. M – 000218), as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by the Company for the Financial Year ending 31st March,2026. M/s S. R. Bhargave & Co., have confirmed that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) read with Section 148(5) of the Companies Act, 2013.

As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking Members' ratification for the remuneration payable to M/s S. R. Bhargave & Co., Cost Auditors is included in the Notice convening the 37th Annual General Meeting.

The Cost Audit Report for the Financial Year 2024-25 will be filed within the stipulated period.

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. Uma Lodha & Co. (C.P. No.2593 & Peer review Certificate No. 6629/2025) Company Secretaries in Practice, Mumbai, as the Secretarial Auditor to undertake the Secretarial Audit of the Company for the financial year ended March31, 2025.

The Secretarial Audit Report for the Financial Year ended 31st March, 2025 is annexed herewith and forms an integral part of this report. The report does not contain any qualification, reservation, or adverse remark or disclaimer. Further, the Company is in compliance with the Secretarial Standards, specified by the Institute of Company Secretaries of India (‘ICSI').

Further, the Board of Directors, based on recommendation of Audit Committee, at their meeting held on May 29, 2025, re-appointed M/s. Uma Lodha & Co. (C.P. No.2593 & Peer review Certificate No. 6629/2025) Company Secretaries in Practice, Mumbai, as the Secretarial Auditor to audit the Secretarial Records of the Company for the first term of five consecutive years effective from the Financial Year 2025-26. M/s Uma Lodha & Co. have confirmed that their appointment is within the provisions of Section 204 read with Rule 9 of Chapter XIII (Appointment and Remuneration of Managerial Personnel) Rules, 2014 of the Companies Act, 2013.

As per the provisions of the Companies Act, 2013, the proposed re-appointment is required to be placed before the Members in a General Meeting for their approval. Accordingly, a resolution seeking Members' approval for the said re-appointment of M/s. Uma Lodha & Co. Secretarial Auditor is included in the Notice convening the 37th Annual General Meeting.

The Company has undertaken an audit for the Financial Year ended 31st March, 2025 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by M/s Uma Lodha & Co. (C.P. No.2593 & Peer review Certificate No. 6629/2025), Company Secretaries in Practice, Mumbai has been submitted to the Stock Exchanges within the prescribed timelines. The said report contains qualified matters for which the responses have been incorporated in the said report.

The Internal Auditor of the Company is a permanent invitee to the Audit Committee Meeting and regularly attends the Meetings for reporting their findings of the internal audit to the Audit Committee Members.

During the year under review, the Statutory Auditors and Secretarial Auditor of your Company have not reported any instances of fraud committed in your Company by Company's officers or employees, to the Audit Committee, as required under Section 143(12) of the Act.

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with rule 8 of the Companies (Accounts) Rules, 2014, as amended is provided as Annexure – I of this report.

The details of the CSR Committee are provided in the Corporate Governance Report, which forms part of this Annual Report. The CSR policy is available on the website of your Company and the link for the same is https://www.varroc.com/ upload/ financial results/ 17068631711735884362.pdf

During the year under review the Company was required to spend RS. 29.56 million towards CSR activities against which, the Company has spent RS. 36.81 million.

The Annual Report on CSR activities as required to be given under Section 135 of the Companies Act, 2013 and Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been provided in an Annexure – III of this Report.

Your Company had 5,323 employees as on March31, 2025. The information required under Section 197 of the Act, read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relating to percentage increase in remuneration, ratio of remuneration of each Director and Key Managerial Personnel (KMP) to the median of employees' remuneration are provided in Annexure – II of this report.

The statement containing particulars of employees, as required under Section 197 of the Act, read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. However, in terms of Section 136 of the Act, the Annual Report is being sent to the shareholders and others entitled thereto, excluding the said annexure, which is available for inspection by the shareholders at the Registered Office of your Company during business hours on working days of your Company. If any shareholder is interested in obtaining a copy thereof, such shareholder may write to the Company Secretary in this regard.

The said statement is also available on your Company's website, the weblink to which is https://www.varroc.com/ investors/annual-report

The Company had no employee who was employed throughout the Financial Year or part thereof and was in receipt of remuneration, which in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or wholetime director or manager and holds by himself or along with his spouse and dependent children, not less than 2% of the equity shares of the Company.

Your Company is committed towards providing a healthy working environment to all its employees and thus does not tolerate any discrimination and/or harassment in any form. The Company has in place a robust Policy on Prevention of Sexual Harassment at Workplace, which is in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) alongwith consultants are covered under this Policy. The Policy is gender neutral.

The employees are sensitised from time to time on matters relating to prevention of sexual harassment. Awareness programmes are conducted at unit levels to sensitise the employees to uphold the dignity of their colleagues at workplace. Further, the Company has constituted an Internal Complaints Committee to, inter-alia, prevent sexual harassment at the workplace and redress the complaints received in this regard.

During the year under review, your Company has received 4 complaints pertaining to sexual harassment. All complaints have been resolved successfully. There were no complaints pending as on March31, 2025.

All new employees go through a detailed orientation on anti-sexual harassment policy adopted by your Company.

Your Company has adopted a whistle blower policy and has established the necessary vigil mechanism for directors and employees in confirmation with Section 177 of the Act and Regulation 22 of SEBI Listing Regulations, to facilitate reporting of the genuine concerns about unethical or improper activity, without fear of retaliation. The vigil mechanism of your Company provides for adequate safeguards against victimisation of whistle blowers who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. No person has been denied access to the Chairman of the Audit Committee. The said policy is uploaded on the website of your Company and the link for the same is https://www.varroc.com/upload/financial_results/170686363170852865.pdf

In view of increased cyber-attack scenarios, the cyber security is reviewed periodically and the processes, technology controls are being enhanced in-line with the threat scenarios. Your Company's technology environment is enabled with real time security monitoring with requisite controls at various layers starting from end user machines to network, servers, application and the data.

Your Company has adopted a Code of Conduct ("Code") to regulate, monitor and report trading in Company's shares by Company's designated persons and their immediate relatives as per the requirements under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015. The Code, inter alia, lays down the procedures to be followed by designated persons while trading/ dealing in Company's shares and sharing Unpublished Price Sensitive Information ("UPSI"). The Code covers Company's obligation to maintain a digital database, mechanism for prevention of insider trading and handling of UPSI, and the process to familiarise with the sensitivity of UPSI. Further, it also includes code for practices and procedures for fair disclosure of unpublished price sensitive information which has been made available on the Company's website and link for the same is https://www.varroc.com/upload/financial_results/1743067285168558948. pdf. The employees are required to undergo a mandatory training on this Code to sensitise themselves and strengthen their awareness.

Neither the Chairman nor the WTD of your Company received any remuneration or commission from any of the subsidiary of your Company. Your directors state that no disclosure or reporting is required in respect of the following items, as there were no transactions/events of these nature during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of Shares (Including Sweat Equity Shares) to employees of your Company under any scheme.

3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and your Company's operation in future.

4. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/purchase of which loan was given by your Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under Section 67(3)(c) of the Act).

5. The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.

6. There was no fraud reported by the Statutory Auditors and the Secretarial Auditors of the Company under Section 143(12) of the Act to the Audit Committee.

7. Application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 – Nil

8. One time settlement of loan obtained from the Banks or Financial Institutions – Nil

9. There were no instance of revision of financial statements and Board's Report of your Company.

10. The Company has complied with the applicable provisions of Maternity Benefit Act, 1961.

11. The Code on Social Security, 2020 (‘Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

12. The Company uses SAP ECC R6 as the accounting software. SAP ensures an audit trail, providing standard functionality and logging in all changed data in the system. This functionality and audit trail feature in SAP has been operational throughout the year for all relevant transactions recorded through the application in the Company. Further, there were no instances of the audit trail feature being tampered with in respect of the accounting software during the year.

Normal / regular users are not granted nor have direct SAP back-end database (DB) or super user level access which would allow them to make any changes to financial documents directly which have already been posted through the application. However, changes to the database by a super user specifically does not carry the feature of a concurrent real time audit trail.

Additionally, the audit trail of prior year has been preserved by the Company as per the statutory requirements for record retention to the extent it was enabled and recorded in the respective year.

The Company has used an accounting software which is operated by a third-party software service provider, for maintaining its payroll records. In the absence of necessary evidence regarding audit trail in the Service Organisation Controls report received by us, management is unable to comment whether the audit trail feature was enabled and operated throughout the year for all relevant transactions recorded in the payroll processing software or whether there were any instances of the audit trail feature being tampered with. Additionally, management is also unable to comment whether the audit trail has been preserved by the Company as per the statutory requirements for record retention.

13. The Certificate duly signed by the Chairman & Managing Director and Group Chief Financial Officer on the Financial

Statements of the Company for the year ended March31, 2025, as submitted to the Board of Directors at its meeting held on May 29, 2025, is annexed to this report.

14. The declaration by the Chairman & Managing Director regarding compliance by the Board members and senior management personnel with the Company's Code of Conduct is annexed to this report.

15. The details of the difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof: Nil

As a responsible corporate entity, the Company wholeheartedly endorses and supports the ‘Green Initiative' launched by the Ministry of Corporate Affairs, Government of India. This initiative facilitates electronic delivery of documents, including the Annual Report, quarterly and half-yearly results, and other such documents, to shareholders' registered e-mail addresses with their DPs or with the Company or its RTA. An electronic copy of the Notice of the 37th Annual General Meeting of the Company shall be sent to all Members whose email addresses are registered with the Company/ Depository Participant(s).

The Directors acknowledge their deep appreciation to employees at all levels for their total dedication, hard work, commitment and collective teamwork, which has enabled the Company to remain at the forefront of the industry despite increased competition and challenges. Your Directors take this opportunity to express their grateful appreciation for the excellent assistance and co-operation received from its customers, your Directors also extend their appreciation to Bankers and various departments of Central and State Government(s). Your directors would also like to thank all the shareholders for their continued support and co-operation.