Directors Report of Shanthi Gears Ltd.

Mar 31, 2025

The Board is pleased to present the 52^nd Annual Report
together with the audited financial statements for the
year ended 31^st March 2025.

1. Business Environment
Global Economic Scenario

The global economy in FY 2024-25 remained resilient.
According to the International Monetary Fund (IMF),
world GDP growth was approximately 3.3% in 2024,
with a similar pace expected in 2025.

Key factors influencing the global environment:

• Monetary tightening by major central banks to
combat inflation

• Geopolitical tensions and trade policy
uncertainties, impacting trade and investment
flows

• Inflation easing, projected to decline from 6.8% in
2023 to around 4.5% by 2025, but remains above
target levels in many economies

• Risks remain elevated, including trade barriers,
financial market volatility, and geopolitical
fragmentation

Despite these headwinds, global industrial activity
saw modest growth, supported by resilient demand
in infrastructure and energy sectors, particularly for
capital goods and industrial equipment. However,
consumer demand softened in several regions.

On the Economy
Indian Economy:

India’s economy was a standout performer. It became
4th largest global economy in 2025 and is projected
to be world’s fastest growing major economy (6.3% to
6.8% in FY 2025-26). Robust domestic demand driven
by private consumption and sustained investment
supported it’s growth trajectory. Government reforms
over the past decade, coupled with strong public
infrastructure spending, have boosted manufacturing
and service activity. Government continued its
infrastructure push, raising capital expenditure outlay
of T 11.21 lakh crores (3.1% of GDP) earmarked in FY
2025-26 Union Budget. As the IMF reaffirms India’s
economic resilience, the country’s role as a key
driver of global growth continues to gain prominence.
Government initiatives (e.g. Make in India, Production-
Linked Incentive schemes) and improving ease
of doing business have continued to support the
manufacturing sector’s expansion. The IMF projects
steady expansion for the Indian economy, supported
by firm private consumption, particularly in rural
areas. Overall, India’s macroeconomic fundamentals
(moderating inflation, stable currency, adequate
forex reserves) provided a favourable backdrop for

inHi iQtripl firmQ

Industrial Gear Industry Outlook

The industrial gears and gearboxes sector witnessed
steady growth during the year, underpinned by revival
in core sectors and modernization trends. Global
market prospects remain positive - industry research
indicates the global industrial gearbox market will
increase from about $31-33 billion in 2024 to $41¬
47 billion by 2029-2033, implying a CAGR of roughly
4.5-5.5%. Key drivers worldwide include rising
automation in manufacturing, increased investments
in renewable energy (wind turbines deploy large
gearboxes), and demand for energy-efficient
motion control solutions. The global gear market
(including automotive and industrial) is similarly
projected to expand at ~5-6% CAGR, reaching an
estimated $222 billion in 2025. Manufacturers are
embracing advanced technologies, for example, the
use of AI/ML-driven design, analytics for predictive
maintenance, and adoption of Industry 4.0
components (like IoT, AR/VR in training) - to improve
product precision and reliability. These trends are
enabling gear producers to optimize productivity
and meet stringent global quality standards.

Indian Gear Industry

India is one of the largest gear markets in Asia and has
experienced significant growth over the past decade.
FY 2024-25 continued this trajectory, propelled by
multiple factors: (1) Strong end-user demand - rapid
industrialization, infrastructure projects (steel, cement,
power generation, railways) and a rebound in mining
and construction activity all drove higher demand for
industrial gearboxes. Sectors like steel, cement and
power - which heavily rely on gear-driven machinery,
saw robust capacity utilization, translating into new
orders for gear manufacturers. (2) Automotive sector
expansion - even as electric vehicles (EVs) gather
pace, conventional and EV powertrains require
high-precision gears. The shift towards EVs presents
a new avenue for specialized gear and EV gearbox
production, supported by the government’s push for
electric mobility. (3) Policy support - pro-manufacturing
initiatives such as Make in India and higher import duties
on certain equipment have encouraged localization
of gear manufacturing. Both domestic and foreign
investments flowed into the sector, building capacity
and technological capabilities. (4) Technological
adoption - Indian gear makers have increasingly
automated and digitized their operations, using CAD/
CAM design, CNC machining centers, and robotics.
Many are integrating Industry 4.0 practices (AI/ML
algorithms for quality control, digital twin simulations,
etc.) into factories. This has enhanced operational
efficiency and product quality across the industry.
Going forward, industry analysts anticipate steady
growth in the Indian gear market (IMARC projects
~2.7% CAGR during 2025-2033 in value terms, though
volume growth may be higher), with demand bolstered
by ongoing infrastructure development and India’s
cost-competitive manufacturing base. In summary, the
business environment for Shanthi Gears in FY2024-25
featured a stable global economy with pockets of
industrial demand, a strongly growing domestic
economy investing in infrastructure, and a gear industry
evolving through innovation and expanding to serve
new markets.

Growth Drivers

Growing Demand from Industrial Applications:
Gears have wide ranging applications across
industries including oil & gas production plants, steel
manufacturing facilities among others where they serve
as components facilitating movement between various
parts of machines/equipment used on shop floors.
Rising investments across these sectors resulting
from government policies such as Make-in-India will
further drive up demand during 2025-2031 making it
another key driver behind industry expansion.

Growing Demand from Automotive Industry: India’s
automotive industry has been growing consistently
owing to increasing middle class wealth, improving
living standards and rising disposable incomes. This
has resulted in increased demand for vehicles which
use gears as a crucial component that enables power
transmission between different parts of an engine or
vehicle body. Thus, this segment will be responsible
for majorly fuelling growth in the overall gear market
during 2025-2031.

Challenges of the Market

High Maintenance Costs; Gears require regular
maintenance due to their wearing out quickly when
exposed to extreme temperatures or long hours
without lubrication leading to higher costs associated
with quality control measures needed while using
them over prolonged periods of time thereby limiting
their adoption rate amongst prospective customers
operating on thin margins.

Increasing Raw Material Prices; With rise in raw material
prices like iron ore used extensively while producing
gears coupled with increasing costs associated with
labor required for machining processes involved;
manufacturers are facing challenges squeezing profits
out of every transaction made thereby impacting
financial performance adversely hampering prospects
related with further growth down the line.

Trends of the Market

Customized Solutions Gaining Traction; As
businesses move towards multi enterprise software
solutions integrated within workflows managed by
internal teams customized solutions are becoming

increasingly popular offering more precise results
tailored according to customer needs.

Focus on Reducing Total Cost Ownership; To remain
competitive manufacturers are relying heavily upon
cost effective methods involving strategic integration
points throughout supply chain process allowing them
flexibility regarding price decisions enabling faster
response times helping maintain healthy profit levels
even after factoring expenses incurred while.

Sector-wise prospects
Railway

Indian Railways are embarked on a transformation
phase in the next five years. The following five key
developments will shape the future of India’s rail
transport system:-

1. Uncompromised Safety Standards with paramount
focus on safety.

2. A New Generation of Trains: The Railway Minister
has announced a large-scale introduction of
advanced trains, ensuring modernized travel
experiences. “We will see a large-scale movement
of Vande Bharat Trains, Vande Bharat Sleeper
Trains, Amrit Bharat Trains, and Namo Bharat
Trains in the coming years,” he stated.

3. The Greenest Railways: Indian Railways is set to
become the world’s greenest railway network with,
government’s commitment to sustainability and
eco-friendly transportation.

4. Expansion of Bullet Train Corridors: India’s high¬
speed rail ambitions are expanding, with new bullet
train corridors planned across the country. “In the
coming years, we will see bullet train corridors
coming up in many parts of the country.”

5. Next-Generation Locomotives & Global Expansion:
India’s plans to become a major manufacturer and
exporter of railway equipment. “We will also see
a totally new generation of locomotives. India will
become a major railway equipment manufacturer
and exporter in the coming years—the way we have
in electronics, technology, and defence equipment.

Besides the above the Indian Railway Production
Units will add 3,000 numbers of High Horse Power
Locomotives creating demand of associated
products to meet their Production Plans.

With Indian Railways serving millions of passengers
daily, modernisation has been a long-standing
priority to enhance speed, safety, and efficiency.
Government’s commitment to leveraging cutting-
edge technology and infrastructure advancements,
will ensure that the railways evolve into a world-class
transportation system.

Extrusion

The global extruder market size is worth around
USD 10,119 million in 2024 and is anticipated to
reach around USD 16,799 million by 2034, growing
at a notable CAGR of 5.2% from 2024 to 2034.

The extruder market refers to the production,
distribution, and use of this machine, which extrudes
plastic, metal, or clay through a die. There is a high
demand for these extruders in applications like
consumer goods, transportation, and building &
construction, which is driving the growth of the
extruder market.

The India Extruders Market is growing as industries
rely on extrusion technology for the production of
various plastic and metal products. Extruders are
critical for shaping materials into desired forms,
making them essential in sectors like packaging,
construction, and automotive. The market''s
expansion is driven by the diverse applications of
extrusion technology in India manufacturing.

The India extruders market is witnessing growth driven
by the plastics and polymer processing industry.
Extruders play a vital role in shaping and processing
raw materials into various products, such as pipes,
films, and profiles. The booming construction and
packaging industries, along with the demand for
innovative and sustainable materials, contribute to
the adoption of advanced extrusion technology.

The extruders market in India faces challenges related
to the customization of equipment to meet diverse
industry requirements. Different industries require
various types of extruders, and meeting these specific
needs can be complex. Additionally, maintaining
consistent product quality, especially for food and
plastic processing, is a challenge. The demand for
sustainable and energy-efficient extrusion solutions
further complicates product development.

2. Company Performance

Particulars	Year Ended 31.03.2025	Year Ended 31.03.2024
Revenue from Operations (Net)	604.62	536.05
Earnings Before Interest Tax Depreciation & Amortisation	143.39	122.85
Depreciation and amortisation expense	13.30	13.21
Profit Before Tax	130.09	109.64
Less: Tax Expenses	34.06	27.39
Profit After Tax	96.03	82.25
Add: Surplus brought forward	136.08	92.23
Appropriations:
Final dividend paid during the year	15.34	15.38
Tax on final dividend paid during the year	-	-
Interim dividend paid during the year	23.02	23.02
Tax on interim dividend paid during year	-	-
Balance carried to Balance Sheet	193.75	136.08

Cranes

The India crane market size reached USD 3.6 Billion
in 2024. Looking forward, IMARC Group expects the
market to reach USD 5.4 Billion by 2033, exhibiting a
growth rate (CAGR) of 4.4% during 2025-2033. The
India crane market share is significantly expanding
due to the growth in the construction industry, rapid
technological advancements, and extensive research
and development (R&D) activities in the region.

Cranes are a type of construction machinery used for
loading and unloading heavy materials, machines, and
goods. They are manufactured using high-strength,
low-alloy (HSLA) steels and elements, such as nickel,
titanium, chromium, molybdenum, vanadium, and
niobium. Mobile, fixed, marine, and port are some
of the commonly available types of cranes. They are
equipped with cables, pulleys, hoists, and wire ropes
and utilize electric motors and hydraulic systems to
provide great lifting capabilities. Cranes are cost-
effective and offer a faster setup that helps improve
efficiency and increase safety and productivity. As
a result, they find extensive applications across
the mining, construction, excavation, oil and gas,
and marine industries.

One of the key factors driving the India crane
market growth is the increasing construction and
infrastructure activities in the country. Cranes are
widely used to lift and lower objects and move
them horizontally for the construction of bridges,
buildings, roads, and overpasses. In line with this,
the rapid expansion of residential, commercial,
and industrial spaces is contributing to the India
crane market demand. Moreover, the widespread
adoption of mobile cranes due to their flexibility and
mobility in areas where static cranes can’t reach is
positively impacting the India crane market trends.

Material Handling

The global material handling equipment market size
was valued at USD 239.3 billion in 2024. The market
is projected to grow from USD 252.53 billion in 2025
to USD 390.88 billion by 2032, exhibiting a CAGR of
6.4% during the forecast period.

The India material handling equipment market
generated a revenue of USD 5.79 billion in 2024
and is expected to reach USD 8.7 billion by 2030.
The India market is expected to grow at a CAGR of
7.2% from 2025 to 2030.

In terms of segment, cranes & lifting equipment
was the largest revenue generating product in 2024.
Racking & Storage Equipment is the most lucrative
product segment registering the fastest growth
during the forecast period.

In terms of revenue, India accounted for 2.4% of the
global material handling equipment market in 2024.
Country-wise, China is expected to lead the global
market in terms of revenue in 2030.

In Asia Pacific, China material handling equipment
market is projected to lead the regional market in
terms of revenue in 2030. India is the fastest growing
regional market in Asia Pacific and is projected to
reach USD 8.7 billion by 2030.

Manufacturing segment dominated the India
material handling equipment market and will
continue its dominance throughout the forecast.
Make in India initiative to boost the growth of the
manufacturing sector, the market is expecting
to see attractive growth in manufacturing and
consequently in logistics and distribution activities
for the forecast duration. Total warehousing
requirement in India is expected to grow at a CAGR
of 7.5%. India logistic industry expected to grow at
15% to 20% per annum.

Cement

The Indian cement industry is a key pillar of the
nation’s infrastructure and economic growth. As
the second-largest cement producer globally, it
significantly contributes to India’s GDP, industrial
output, and employment. With an installed capacity
of around 690 million tpy, the sector plays a
crucial role in housing, transportation, and urban
infrastructure. Cement production for FY23 - 24
is estimated at 390 million tpy, reflecting steady
demand supported by government initiatives and
private investments.

The industry’s growth has been marked by substantial
capacity additions, with over 15 million tpy added in
2022 - 23 by major players like UltraTech Cement,
Shree Cement, and ACC-Ambuja. However, capacity
utilisation is mixed, averaging 65 - 70%, with North
and East India operating at near 80%, while the South
faces overcapacity with utilisation as low as 50 - 55%.

3. Review of Operations

In FY24-25, the Company reported improved
performance. Revenue from Operations at
T604 crores, registering a growth of 13% growth
over the previous year. This growth was owing to an
increase in order inflow and deliveries.

Focus on Replacement segment in power transmission
helped in sustaining the competitive advantage.
The business continued to build relationships through
high levels of customer engagement during the year.

Specific attention is given for development of alternate
materials and processes to drive value addition
and cost reduction. Capital investments were made
wherever technological upgradation was required.
Source:

• https://www.wor1dcement.com/

Housing accounts for 60% of cement consumption,
followed by infrastructure projects (25%) and
commercial real estate (15%). Government
programmes like Bharatmala, Sagarmala, and
Pradhan Mantri Awas Yojana (PMAY) are major
drivers, with demand expected to exceed 500 million
tpy by 2030.

EBITDA increased to T143.39 crore in FY25
from T122.85 crores in FY24 - a growth of 17%.
The Company registered a net profit of T96.03 crores
(17% increase).

From a liquidity standpoint, the Company generated
a Free Cash Flow of T75.47 crores during the
financial year and registered 75% growth over the
previous year.

The Company’s Return on Capital Employed
improved to 35% in FY25 from 34% in FY24.

The Company remains debt free and invests its
surplus funds judiciously balancing safety and
returns.

4. Dividend

The Board of Directors declared an Interim Dividend
of T3/- per share (@ 300%) on equity share of
the face value of T1/- each for the financial year
2024-25, which was paid on 26^th February, 2025
to all the eligible shareholders. A final dividend of
T2/- per share (@ 200%) has been proposed by
the Board for the said financial year and together
with the Interim Dividend of T3/- per equity share,
already declared and paid, in respect of the
financial year 2024-25, T5/- per share (@500%) will
be considered as the total Dividend for the said
financial year.

The dividend pay-out this year exceeded w.r.t
Company’s policy on Dividend Distribution, to
commemorate the company’s performance.
The Dividend Policy as approved by the Board is
uploaded and is available on the following link on
the Company’s website, http://www.shanthigears.
com/wp-content/uploads/2021/04/SGL-Dividend-
Distribution Policy.pdf.

Details thereof also form part of this Annual Report
for the information of shareholders as Annexure-A.

5. Share Capital

The paid up Equity Share Capital as on
31^st March 2025 was T7.67 Crores.

6. Deposits

The Company has not accepted any deposits
under Chapter V of the Companies Act, 2013 and
as such no amount of principal and interest were
outstanding as on 31^st March 2025.

7. Particulars of Loans, Guarantees

During the year under review, the Company has
not given any loans or guarantees under the
provisions of Section 186 of the Companies
Act, 2013. As part of treasury management, the
Company deploys short-term surplus in units of
mutual funds, the details relating to which form
part of the Notes to the financial statements
provided in this Annual Report.

8. Directors

Mr. Arun Venkatachalam,will retire by rotation
at the ensuing Annual General Meeting under
Section 152 of the Companies Act, 2013 and being
eligible, he offers himself for re-appointment.

The Board records its appreciation for
Mr. J Balamurugan and Mr. N Krishna Samaraj,
Independent Directors for their dedication
and contributions towards the growth of the
organization. They retired from the Board
w.e.f 29^th July, 2024. During the Financial Year
2024-25 Mr. A Venkataramani, has been
appointed as Independent Director with effect
from 09^th May, 2024.

The Board of Directors confirms that the
independent directors appointed during the year
possess strong integrity and ethical conduct.
After reviewing their qualifications, background,
and experience, the Board believes the director
brings valuable expertise in negotiating joint
venture agreements and setting up greenfield
projects. Their skills in strategic decision¬
making, governance, and risk management will
enhance the Board’s effectiveness. The Board is
confident that their independent perspective and
contributions will support the company’s long¬
term growth and strong governance.

All the Independent Directors of the Company
have furnished necessary declaration in terms
of Section 149(6) of the Act affirming that they
meet the criteria of independence as stipulated
under the Act. In the opinion of the Board, all
the Independent Directors fulfil the conditions
specified in the Companies Act, 2013 and Rules
made thereunder and SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015
and are independent of the Management.

9. Key Managerial Personnel

Mr. M Karunakaran, CEO & Whole-time Director,
Mr. Walter Vasanth P J, Company Secretary &
Compliance Officer and Mr. Ranjan Kumar Pati,
Chief Financial Officer are the Key Managerial
Personnel (KMP) of the Company as per
Section 203 of the Companies Act, 2013.

10. Internal Control System and their Adequacy

The Company has an Internal Control System,
commensurating with its size, scale and
complexity of its operations.

It has a sound system of internal controls in
place to ensure the achievement of goals,
evaluation of risks, and reliable financial and
operational reporting.

This efficient internal control procedure is driven
by a robust system of checks and balances that
ensures the safeguarding of assets, compliance
with all regulatory norms, and procedural and
systemic improvements periodically.

The Company uses an ERP (Enterprise
Resource Planning) package supported by
in-built controls. This guarantees timely financial
reporting. The audit system periodically reviews
the control mechanism and legal, regulatory, and
environmental compliances.

The internal audit team also checks the
effectiveness of internal controls and initiates
necessary changes arising out of inadequacies,
if any. All financial and audit controls are further
reviewed by the Audit Committee of the Board
of Directors.

11. Internal Financial Control Systems with
reference to financial statements

The Company has a formal system of internal
financial control to ensure the reliability of
financial and operational information, and
regulatory and statutory compliances. The
Company’s business processes are enabled by
an Enterprise-wide Resource Platform (ERP) for
monitoring and reporting processes resulting
financial discipline and accountability.

12. Enterprise Risk Analysis and Management

The Company’s risk strategy is determined by its
risk appetite defined by a series of risk criteria.
The criteria are based on sectoral realities,
customer circumstances, liquidity available and
its earnings target within accepted volatility
limits. These criteria provide a reference for our
operating divisions.

The Company’s risk management framework
comprises a combination of centrally issued
policies and divisionally-evolved procedures that
are regularly reviewed for their alignment with
sectoral dynamics and evolving trends.

The framework encompasses strategy and
operations and seeks to proactively identify,
address and mitigate existing and emerging
risks with the goal of making the business model
emerge stronger and business growth becomes
sustainable.

The Company has constituted a Risk Management
Committee aligned with the requirements of the
Companies Act, 2013 and Listing Regulations.
The details of the Committee and its terms of
reference are set out in the Corporate Governance
Report forming part of this Report.

The Company operates across various product
platforms built over the years. Relative
advantages and disadvantages of such product
verticals are studied and advances are tracked.
The Company seeks to address technology gaps
through continuous benchmarking of existing
manufacturing processes with developments in
the industry and in this connection has made
arrangements with technology consultants.

Sub-par utilization of capacities may lead to
inadequate leverage benefits. The Company
is ramping up its marketing efforts towards
successful product establishment and
market acceptance of its products, exploring
development of alternate products and
establishing a range of applications.

13. Corporate Governance

Your Company is committed to maintaining high
standards of Corporate Governance. A report on
Corporate Governance, along with a certificate
from the Practicing Company Secretary on
compliance with Corporate Governance norms
forms part of this report as Annexure-H.

14. Corporate Social Responsibility (CSR)

As a corporate citizen, your Company is
committed to the conduct of its business in a
socially responsible manner. The Company
contributed a portion of its profit to the promotion

of worthy causes like education, healthcare,
scientific research etc. As a part of the Corporate
Social Responsibility program, the Company has
undertaken projects in the areas of Education,
Scientific Research, etc., List of CSR Activities,
Composition of CSR Committee and CSR Policy
is annexed herewith as Annexure-B.

15. Annual Return

The Annual return in Form MGT-7 is available
on the Company’s website at the following link:
http://www.shanthigears.com/annual-return/.

16. Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies
Act, 2013, the Board of Directors to the best of
their knowledge and belief confirm that:

a) in the preparation of the annual accounts,
applicable Accounting Standards have been
followed and that there were no material
departures therefrom;

b) they have, in the selection of the accounting
policies, consulted the statutory auditors
and have applied their recommendations
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 31^st March 2025
and of the profit of the Company for the year
ended on that date;

c) they 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) they have prepared the annual accounts 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
were operating effectively during the year
ended 31^st March 2025; and

f) proper system has been devised to ensure
compliances with the provisions of all
applicable laws and that such systems were
adequate and operating effectively during the
financial year ended 31^st March 2025.

17. Policy on Appointment and Remuneration of
Directors

Pursuant to Section 178 (3) of the Companies
Act, 2013 the Nomination and Remuneration
Committee of the Board of the Company has
formulated the criteria for Board nominations as
well as policy on remuneration for Directors and
employees of the Company. The Remuneration
policy provides the framework for remunerating
the members of the Board, Key Managerial
Personnel and other employees of the Company.
This policy is guided by the principles and
objectives enumerated in Section 178 (4) of
the Companies Act, 2013 and reflects the
remuneration philosophy and principles of the
Murugappa Group to ensure reasonableness
and sufficiency of remuneration to attract, retain
and motivate competent resources, a clear
relationship of remuneration to performance and
a balance between rewarding short and long¬
term performance of the Company. The policy
lays down broad guidelines for payment of
remuneration to Executive and Non-Executive
Directors within the limits approved by
the shareholders.

The Board Nomination criteria and the
Remuneration policy are available on the website
of the Company at http://www.shanthigears.
com/wp-content/uploads/2019/05/SGL-
Remuneration-Policy-Mar-2019.pdf.

18. Related Party Transactions

All related party transactions that were entered during
the year under review were on an arm’s length basis
and were in ordinary course of business. There are
no materially significant related party transactions

during the year which may have a potential conflict
with the interest of the Company at large. Necessary
disclosures as required under Accounting Standard
(Ind AS 24) have been made in the notes to the Financial
Statements. The Policy on Related Party Transactions,
as approved by the Board, is uploaded and is available
on the Company’s website https://www.shanthigears.
com/wp-content/uploads/2025/04/Policy-on-
Related-Party-Transactions.pdf.

None of the Directors had any pecuniary relationships
or transactions vis-a-vis the Company.

All transactions with Related Parties under the
Companies Act, 2013, entered during the financial
year were in the ordinary course of business at arm’s
length and hence no particulars are required to be
entered in the Form AOC-2. Further, all transactions
entered into with Related Parties during the year
even at arm’s length basis in the ordinary course
did not exceed the thresholds prescribed under
the Companies (Meetings of Board and its Powers)
Rules, 2014 or Listing Regulations or the Company’s
Policy in this regard and hence no disclosure was
required to be made in Form AOC-2. Accordingly,
there are no contracts or arrangements entered into
with Related Parties during the year to be disclosed
under Sections 188(1) and 134(3)(h) of the Companies
Act, 2013 in Form AOC-2. The form is enclosed
as Annexure E.

19. Board Evaluation

The manner in which the evaluation has been
carried out has been explained in the Corporate
Governance Report.

20. Vigil Mechanism/Whistle Blower Policy

The details of Vigil Mechanism/Whistle Blower policy
are given in the Corporate Governance Report.

21. Business Responsibility & Sustainability Reporting

As required under the SEBI Listing Regulations
which mandate the inclusion of a Business
Responsibility & Sustainability Report as part
of the Annual Report for the top 1000 listed

entities based on market capitalization, the
Business Responsibility Report forms part of
the Annual Report as Annexure G. The Business
Responsibility Policy of the Company is displayed
in the Company’s website at the following link:
http://www.shanthigears.com/wp-content/
uploads/2020/06/SGL-BRR-Policv-Mav-2020.pdf

22. Declarations/Affirmations

During the year under review:

• there were no material changes and commitments
affecting the financial position of the Company,
which have occurred between the end of the
financial year of the Company to which the
financial statements relate viz., 31^st March 2025
and the date of this Report; &

• there were no significant material orders passed
by the regulators or courts or tribunals impacting
the Company’s going concern status and its
operations in future.

23. Human Resources

Intellectual capital has been the cornerstone
of Shanti Gear’s sustenance over the years.
The Company has a large pool of engineers.
This critical competitive edge has enabled the
Company to stand out from the clutter and
develop niche solutions that address the ever-
evolving requirements of the sectors it caters to.

The HR strategy and initiatives of your Company
are designed to effectively partner the business
in the achievement of its ambitious growth plans
and to build a strong leadership pipeline for
the present and several years into the future.
Industrial Relations continued to be cordial.

Senior leaders have been investing lot of time and
efforts in identifying and developing succession
pipeline for critical positions in the organization.
The transition management programmes viz., FTF
and LEAD have been very successful and as part
of the programme, implementation of Individual
Development Plans (IDPs) for talent pool
identified through these programmes is being

facilitated. The IDPs are being reviewed regularly
and On-the-Job projects, job enlargement/job
rotation, mentoring support to the Talents are
being provided. Coaching & mentoring was done
for select talent across the organization with
an intent of developing future leaders. Internal
employees have been given opportunities to take
up higher roles and grow in the system under
Grow from within Scheme.

The Company had 503 permanent employees on
its rolls, as on 31^st March 2025.

The disclosure with respect to remuneration as
required under Section 197 of the Companies
Act, 2013 read with Rule 5 of the Companies
(Appointment and Remuneration of Managerial
Personnel) Rules, 2014 is attached and forms
part of this Report as Annexure-C.

The information relating to employees and other
particulars required under Section 197 of the
Companies Act, 2013 read with Rule 5 of the
Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 will be provided
upon request. In terms of Section 136 of the
Companies Act, 2013, the Report and Accounts are
being sent to the Members excluding the information
on employees, particulars of which are available
for inspection by the Members at the Registered
Office of the Company during business hours on
all working days of the Company up to the date
of the forthcoming Annual General Meeting. If any
Member is interested in obtaining a copy thereof,
such member may write to the Company Secretary
in the said regard.

>4. Conservation of Energy, Technology Absorption
and Foreign Exchange Earnings and Outgo

Conservation of energy, technology absorption and
foreign exchange earnings and outgo is annexed
herewith as Annexure-D.

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

The Company has in place a Prevention of
Sexual Harassment policy (POSH) in line with the
requirement of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal)
Act, 2013. Internal Compliance Committee (ICC)
has been set up to redress complaints received
regarding sexual harassment. All employees
(Permanent, contractual, temporary and trainees)
are covered under this policy. The Company has not
received any complaints about sexual harassment
during the year 2024-25.

26. Secretarial Audit

Pursuant to the provisions of Section 204 of
the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed
R. Sridharan & Associates, Company Secretaries
to undertake Secretarial Audit of the Company.
The Secretarial Audit Report is annexed herewith and
forms part of this Report as Annexure F. Accordingly,
no qualification or observation or other remarks have
been made by the Secretarial Auditor in his Report.

27. Auditors

The Members have appointed of M/s MSKA
& Associates, Chartered Accountants, (Firm
Registration No 105047W) the Statutory Auditors
of the Company for a period of 5 years from the
conclusion of 50^th AGM (2023) till the conclusion
of 55^th AGM (2028) subject to ratification of
such appointment by members at every AGM.
The requirement to place the matter relating to
the appointment of auditors for ratification by
Members at every AGM has been done away with
the Companies (Amendment) Act, 2017 with effect
from 7^th May 2018. Accordingly, no resolution is
being proposed for ratification of the appointment
of statutory auditors at the Fifty-Second AGM. The
Statutory auditor’s report forms part of the Annual
report and no qualifications or observations or
other remarks have been made by Statutory auditor
in his report.

In accordance with the provisions of Section
148(1) of the Act, read with the Companies (Cost
Records and Audit) Rules, 2014, the Company
has maintained cost records in respect of Gears,
Gearboxes and Accessories for the Financial Year
2024-25. Mr. B. Venkateswar was appointed as
Cost Auditor for the audit of the Cost Accounting
records of the Company for the year ended
31^st March 2026. A resolution seeking Members’
ratification of the Remuneration payable to the
Cost Auditor is included in the AGM notice dated
24^th April 2025. The Cost Audit report will be filed
within the stipulated period.

M/s. Sridharan & Sridharan Associates, Firm of
Company Secretaries in Practice is proposed to
be appointed as Secretarial Auditors for a term
of 5 (Five) consecutive years, from the conclusion
of 52^nd AGM (2025) till the conclusion of 57^th AGM
(2030) subject to shareholders approval at the
52^nd Annual General Meeting. A resolution seeking
Members approval is included in the AGM notice
dated 24^th April 2025.

28. Subsidiaries/Associates/Joint Ventures

The Company does not have any subsidiaries/
Associates/Joint Ventures.

29. Secretarial Standards

The Company has duly complied with the
applicable Secretarial Standards as required by
the Companies Act, 2013.

30. General

The Company has not issued equity shares with
differential voting rights or sweat equity shares,
there is no reportable event with respect to one time
settlement with any Bank or Financial Institution
and no corporate insolvency resolution process was
initiated under the Insolvency and Bankruptcy Code,
2016, either by or against the Company, before
National Company Law Tribunal.

31. Change in Nature of Business

There has been no change in the nature of
business during the financial year under review.

32. Other Confirmations

No application under the Insolvency and
Bankruptcy Code, 2016 (IBC) was made on the
Company during the year. Further, no proceeding
under the IBC was initiated or is pending as
at 31^st March 2025. There was no instance of
one time settlement with any Bank or Financial
Institution.

33. Acknowledgment

The Directors thank all Customers, Vendors,
Banks, State Governments and Investors for their
continued support to your Company’s performance
and growth. The Directors also wish to place on
record their appreciation of the contribution made
by all the employees of the Company in delivering
good performance during the year.

On behalf of the Board
M A M Arunachalam

Place: Coimbatore Chairman

Date: 24 April 2025 (DIN-00202958)

---

Mar 31, 2024

The Board is pleased to present the 51^st Annual Report together with the audited financial statements for the year ended 31^st March, 2024.

1. Business Environment

According to IMF, global growth rate is at 3.2% in CY2023 and is projected to continue at the same rate in CY2024 and CY2025. The pace of expansion is low as compared to past owing to both near-term factors like high borrowing costs, withdrawal of fiscal support, longer-term effects from the COVID-19 pandemic and Russia''s invasion of Ukraine, weak growth in productivity and increasing geoeconomic fragmentation.

The global economy has been surprisingly resilient, despite significant central bank interest rate hikes to restore price stability. Though sharp price increases remain an obstacle across the world, the IMF foresees global inflation tumbling from 6.8% in CY2023 to 5.9% in CY2024 and 4.5% in CY2025. Growth in Emerging and Developing Asia is expected to decline slightly from 5.6% in CY2023 to 5.2% in CY2024 and 4.9% in 2025. The IMF expects the Chinese economy to slow from 5.2% in CY2023 to 4.6% in CY2024 and 4.1% in CY2025.

On the Economy

Indian Economy: The Indian economy is set to achieve nearly 7% growth in the FY24-25. The positive outlook is attributed to the robust domestic demand that has propelled the country to a growth rate exceeding 7% over the past three years. The strength in domestic demand is driven by private consumption and investment, government reforms and initiatives implemented over the past decade. Investments in both physical and digital infrastructure, along with measures to boost manufacturing, have bolstered the supply side, providing a significant boost to economic activity in the country.

Increased Government investment activity has also resulted in the crowding-in of private investment. Capital Goods and Construction/Infrastructure Goods indices of the Index of Industrial Production (IIP) were 6.2% and 9.6% higher during FY24 compared to the previous year. Though imports of capital goods in FY24 were marginally lower than that in the previous year, their share in overall imports increased from 11.8% in FY23 to 12.4% in FY24, indicating a continued build-up of productive capacity in the economy.

Source:

• https://ddnews.gov.in/en/indian-economy-poised-for-7-growth-in-fiscal-year-2024-25-ministry-of-finance/

• https://dea.gov.in/sites/default/files/Monthly%20Economic%20Review%20-April%202024.pdf

Growing investment activity IIP Sub-indices 137 l ” „ » 1" 107								176 161 ii
o C\l Source Rise in 90 80 70 60 50 40 3 30 20 10 n	5 a a a t £ S: £ Capital Goods : MoSPI the share of capital g					1 £ 1 Infrastructu oods in total			j ro J CM CM : re Goods imports 14 13 _ c CD U i_ (D CL 12 ~ . 11
	13.6				85			84 X^2.4
			69
	54
FY21 FY22 FY23 FY24 Import of Capital Goods Share of Capital Goods in Total Imports (RHS) Source: DGCIS, Ministry of Commerce

According to the Ministry of Commerce and Industry, total goods imports by India in 2023-24 decreased by 5.66 percent to US$675.44 billion. Looking ahead, India is actively working on expanding its export portfolio.

Robust public investment driving growth: The Indian government''s steadfast commitment to boosting infrastructure development and public investment has been a driving force behind the country''s economic growth. Increased spending on infrastructure projects, such as roads, ports, and power generation, has not only created employment opportunities but has also facilitated the smooth flow of goods and services, thereby enhancing overall productivity and competitiveness.

Promising export sectors and job creation: While external demand for Indian merchandise exports is expected to remain subdued due to global economic uncertainties, sectors such as pharmaceuticals and chemicals are anticipated to witness strong export growth. These industries, which have emerged as key drivers of India''s export basket, are poised to benefit from the country''s cost-competitiveness and growing global demand for high-quality Indian products. Robust economic growth and higher labor force participation are also contributing to job creation and income generation, improving labor market indicators.

Balanced approach to fiscal prudence: The Indian government''s commitment to fiscal prudence is acknowledged, as it seeks to gradually reduce the fiscal deficit while simultaneously increasing capital investment. This balanced approach aims to strike a balance between promoting economic growth and maintaining fiscal discipline, thereby ensuring long-term macroeconomic stability.

With its strong economic fundamenta ls, strategic focus on infrastructure development, resilient domestic demand, and promising export sectors, India is well-positioned to navigate global uncertainties and sustain its robust economic growth trajectory in 2024.

On the Industrial Gear Industry: The Industrial Gearbox market growth in India will be driven through, Technological Advancements, Growing Demand, Regulatory Support, Environmental Awareness and Cost reduction initiatives.

The Indian gear industry has experienced significant growth over the past decade, driven by various factors that have shaped the country''s industrial landscape. The rapid industrialization, expansion of the automotive sector and increasing demand for high-precision gears have been key contributors to this growth.

The industrial machinery sector has witnessed steady growth, driven by increasing industrialization and the expansion of sectors such as construction, power generation and mining. These sectors rely heavily on gears for their machinery and equipment, further boosting the demand for gears in India.

India''s favourable business environment, coupled with government initiatives to promote manufacturing and infrastructure development, has created a conducive ecosystem for the gear industry to flourish. The "Make in India" campaign, launched by the Indian government, has attracted both domestic and foreign investments in the manufacturing sector, including gear manufacturing.

Industry shift towards electric vehicles (EVs) has opened up avenues for gear manufacturers to produce specialized gears for EV transmissions and powertrains. With the government''s push for electric mobility, this presents a significant growth opportunity for the industry.

The Indian gear industry has also embraced automation and digitization, incorporating CAD, CAM, and CNC technologies to industry 4.0 components such as AI, ML, AR, etc., into their manufacturing processes. This has enabled gear manufacturers to enhance precision, optimize productivity, and deliver high-quality products that meet global standards.

As, India continues to invest in infrastructure, upskill its workforce, and adopt advanced manufacturing technologies with a competitive cost advantage, India positions itself as a promising destination for gear manufacturing in the future.

On the Economy

On the Industrial Gear Industry

Global gear sector prospects: According to FMI, the industrial gearbox market is expected to grow its revenue share from US$ 30.08 billion in 2023 to US$ 47.16 billion by 2033. Throughout the forecast period, the market is anticipated to exhibit a constant CAGR of 4.6%.

Indian gear sector prospects: India is one of the

largest markets for gears in Asia and has seen steady growth over the past few years. The growing demand for automotive, industrial, and agricultural applications is driving the market forward. In addition to this, government initiatives such as Make-in-India are also pushing up sales of locally manufactured gears.

Gears have wide application in manufacturing industries viz. Steel, Power, Cement, Mining, Oil & gas production plants, among others where they facilitate movement between various parts of machines/ equipment used on shop floors.

Government policies such as Make-in-India will further drive-up demand during making it another key driver behind industry expansion and give global recognition to the Indian economy.

Sector-wise prospects Railway

Indian Railways has announced the implementation of three major economic railway corridor programs aimed at enhancing logistics efficiency and reducing costs. These programs, identified under the PM Gati Shakti initiative, include energy, mineral, and cement corridors, port connectivity corridors, and high traffic density corridors. By decongesting high-traffic corridors, the operations of passenger trains are expected to improve, leading to increased safety and higher travel speeds for passengers.

The conversion of forty thousand normal rail bogies to Vande Bharat standards is set to enhance passenger safety, convenience, and comfort. The Indian government has announced an ambitious plan to manufacture 400 Vande Bharat trains by 2024-25. This is part of its larger goal of developing

Sources:

• IMARC -Indian Railway Budget

the country''s railway infrastructure and boosting local manufacturing under the "Make in India" initiative.

Besides Vande Bharat Express, Indian Railways have plans for 1500 numbers of High-Power Passenger and Goods Locomotives as well as 500 numbers of Self Propelled Motor Coaches for Urban and Suburban transportation to meet increasing demands.

Extrusion

The global plastic extrusion machine market is projected to reach US$ 7113.2 million in 2023. Based on the report, sales of plastic extrusion machines are expected to have a CAGR of 4.70% and to reach an evaluation of US$ 10,754.4 million by 2032.

The demand for plastic extrusion machines is soaring, as there is a growing need for extruded plastic products from several end-use segments, such as packaging, consumer goods, construction and automotive. This primarily boosts the growth of the global plastic extrusion machine market.

The demand for the plastic extrusion machine market is said to be constantly high, as these machines assist in speeding up the workflow and volume, at the same time maintaining stability through manufactured products.

Manufacturers of plastic extrusion machines are progressively aiming towards manufacturing reliable and effective twin-screw plastic extrusion machines. This is anticipated to encourage the growth of the plastic extrusion machine market share during the forecast period. Faster production and increasing manufacturing rates through plastic extrusion are anticipated to support the global plastic extrusion machine market growth.

The global rubber extruder market size is expected to reach US$ 4,234 million by 2032. The rubber extruder market is growing rapidly. As per FMI analysts, the global rubber extruder market is estimated to be valued at US$ 2,527.7 million in 2023 and is projected to increase at a CAGR of 5.3% during the forecast period.

Over the forecast period, the rubber extruder market is expected to gain traction due to its significant drivers, such as the introduction of new and novel rubber products.

2. Company Performance Crores)

Particulars	Year Ended 31.03.2024	Year Ended 31.03.2023
Revenue from Operations (Net)	536.05	445.65
Earnings Before Interest Tax Depreciation & Amortisation	122.85	101.07
Depreciation and amortisation expense	13.21	10.88
Profit Before Tax	109.64	90.19
Less: Tax Expenses	27.39	23.14
Profit After Tax	82.25	67.05
Add: Surplus brought forward	92.23	48.18
Appropriations:
Final dividend paid during the year	15.38
Tax on final dividend paid during the year
Interim dividend paid during the year	23.01	23.01
Tax on interim dividend paid during year
Balance carried to Balance Sheet	136.09	92.23

Several other factors are also expected to boost the demand for rubber extruders, such as the growing automotive manufacturing industry in emerging and developed regions and the growing consumer awareness about comfort is expected to gain traction in the overall industry of rubber extruders. Providing fuel-efficient and high-performance vehicles in the automotive industry is a key consumer demand that manufacturers are able to serve with innovative rubber products.

Cranes

The India''s crane market size reached US$ 3.4 billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 5.2 billion by 2032, exhibiting a growth rate (CAGR) of 4.6% during 2024-2032. The significant growth in the construction industry, rapid technological advancements, and extensive research and development (R&D) activities are some of the key factors driving the market.

Cranes are a type of construction machinery used for loading and unloading heavy materials, machines, and goods. They are manufactured using high-strength, low-alloy (HSLA) steels and elements, such as nickel, titanium, chromium, molybdenum, vanadium, and niobium. Mobile, fixed, marine, and port are some of the commonly available types of cranes. They are equipped with cables, pulleys, hoists and wire ropes and utilize electric motors & hydraulic systems to provide great lifting capabilities. Cranes are cost-effective and offer a faster setup that helps improve efficiency and increase safety and productivity. As a result, they find extensive applications across the mining, construction, excavation, oil and gas and marine industries.

Besides this, the implementation of various government initiatives on infrastructure development, which involves the construction of buildings, bridges, dams, pipelines, road networks, ports and railways, is propelling the market growth.

Material Handling

The global material handling equipment market size was valued at US$ 227.4 billion in 2023 and is expected to expand at a compound annual growth rate (CAGR) of 6% from 2024 to 2030.

Rapid industrialization and increased demand for automation in material handling equipment are expected to fuel market growth in this period.

The India''s Automated Material Handling Market size is estimated at US$ 1.47 billion in 2024, and expected to reach US$ 2.66 billion by 2029, growing at a CAGR of 12.70% during the forecast period (2024-2029).

The ongoing modernization of industrial facilities and infrastructures to improve their production capacity is anticipated to drive the growth of the material handling equipment market.

Expansion plans by Steel Plants and Coal Mining will induce demand, for material handling conveyors.

Cement

India is the second-largest cement producer in the world and accounts for over 8% of the global installed capacity. Of the total capacity, 98% lies with the private sector and the rest with the public sector. The top 20 companies account for around 70% of the total cement production in India. As India has a high quantity and quality of limestone deposits throughout the country, the cement industry promises huge potential for growth.

India''s cement demand will grow by 6%-8% over the next few years as per the credit and analytical report from Fitch a leading financial analyst in the Cement sector. India''s steady GDP expansion of 7%-8% will define growth across various construction end-markets. We expect cement demand from infrastructure and affordable housing markets to increase by the high-single to low-double digits.

The Government of India is strongly focused on infrastructure development to boost economic growth and is aiming for 100 smart cities. The Government also intends to expand the capacity of railways and the facilities for handling and storage to ease the transportation of cement and reduce transportation costs. These measures would lead to increased construction activity, thereby boosting cement demand.

The future outlook of the cement sector looks on track. In the next 10 years, India could become the main exporter of clinker and grey cement to the

Middle East, Africa, and other developing nations of the world. Cement plants near the ports, for instance, the plants in Gujarat and Visakhapatnam, will have an added advantage for export and will logistically be well-armed to face stiff competition from cement plants in the interior of the country.

3. Review of Operations

In FY23-24, the Company reported improved performance. Revenue from Operations at ^536 crores, registering a growth of 20% growth over the previous year. This growth was owing to an increase in order inflow and deliveries.

Focus on Replacement segment in power transmission helped in sustaining the competitive advantage. The business continued to build relationships through high levels of customer engagement during the year.

Specific attention is given for development of alternate materials and processes to drive value addition and cost reduction. Capital investments were made wherever technological upgradation was required.

India''s cement production capacity is expected to reach 550 MT by 2025. The cement demand in India is estimated to touch 419.92 MT by FY27 driven by the expanding demand of different sectors, i.e., housing, commercial construction, and industrial construction. The cement sector is expected to grow at a CAGR of 4.7% during 2024-32.

EBITDA increased to ^122.85 crores in FY24 from ^101.07 crores in FY23 - a growth of 22%. The Company registered a net profit of ^82.25 crores (an 23% increase).

From a liquidity standpoint, the Company generated a Free Cash Flow of ^43.14 crores during the financial year and registered 10% growth over the previous year.

The Company''s Return on Capital Employed imporoved to 34% in FY24 from 32% in FY23.

The Company remains debt free and invests its surplus funds judiciously balancing safety and returns.

4. Dividend

The Board of Directors declared an Interim Dividend of ^3/- per share (@ 300%) on equity share of

the face value of ^1/- each for the financial year 2023-24, which was paid on 23^rd February, 2024 to all the eligible shareholders. A final dividend of ^2/- per share (@ 200%) has been proposed by the Board for the said financial year and together with the Interim Dividend of ^3/- per equity share, already declared and paid, in respect of the financial year 2023-24, ^5/- per share (@ 500%) will be considered as the total Dividend for the said financial year.

The dividend pay-out this year got exceeded w.r.t Company''s policy on Dividend Distribution, to commemorate the company''s performance. The Dividend Policy as approved by the Board is uploaded and is available on the following link on the Company''s website, http://www.shanthigears.com/wp-content/ uploads/2021/04/SGL-Dividend-Distribution Policy.pdf.

Details thereof also form part of this Annual Report for the information of shareholders as Annexure-A.

5. Share Capital

The paid-up Equity Share Capital as on 31^st March, 2024 was ^7.67 crores.

6. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest was outstanding as on 31^st March, 2024.

7. Particulars of Loans and Guarantees

During the year under review, the Company has not given any loans or guarantees under the provisions of Section 186 of the Companies Act, 2013. As part of treasury management, the Company deploys short-term surplus in units of mutual funds, the details relating to which form part of the Notes to the financial statements provided in this Annual Report.

8. Directors

Mr. M A M Arunachalam, will retire by rotation at the ensuing Annual General Meeting under

Section 152 of the Companies Act, 2013 and being eligible, he offers himself for re-appointment.

Mr. J Balamurugan, completed his second term of office, as an independent director of the Company by this AGM. The Board placed on record its appreciation for the valuable services rendered by Mr. J Balamurugan, during his association as an independent director of the Company.

Mr. N Krishna Samaraj, Independent Director will hold office up to the date of the 51^st Annual General Meeting. Mr. N Krishnan Samaraj retires by this Annual General Meeting and not offering himself/seeking reappointment. The Board placed on record its appreciation for the valuable services rendered by Mr. N Krishnan Samaraj, during his association as an independent director of the Company.

Mr. A Venkataramani, has been appointed as an Additional Director in the capacity of a "Non-Executive & Independent Director" with effect from 09^th May, 2024, who meets the criteria for independence under Section 149(6) of the Act and the Rules made thereunder and Regulation 16(1)(b) of the LODR Regulations and in respect of whom the Company has received a notice in writing from a member under Section 160 of the Act, necessary resolution proposing his appointment as an Independent Director of the Company for a period of 5 (five) years till 08^th May, 2029 forms part of the notice of the Annual General Meeting and he shall not be liable to retire by rotation.

The Board takes pleasure in recommending the appointment of Mr. A Venkataramani as an Independent Director of the Company.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated under the Act. In the opinion of the Board, all the Independent Directors fulfil the conditions specified in the Companies Act, 2013 and Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are independent of the Management.

9. Key Managerial Personnel

Mr. M Karunakaran, CEO & Whole-time Director, Mr. Walter Vasanth P J, Company Secretary & Compliance Officer and Mr. Ranjan Kumar Pati, Chief Financial Officer are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

10. Internal Control System and their Adequacy

The Company has an Internal Control System, commensurating with its size, scale and complexity of its operations.

It has a sound system of internal controls in place to ensure the achievement of goals, evaluation of risks and reliable financial and operational reporting.

This efficient internal control procedure is driven by a robust system of checks and balances that ensures the safeguarding of assets, compliance with all regulatory norms and procedural & systemic improvements periodically.

The Company uses an ERP (Enterprise Resource Planning) package supported by in-built controls. This guarantees timely financial reporting. The audit system periodically reviews the control mechanism and legal, regulatory and environmental compliances.

The internal audit team also checks the effectiveness of internal controls and initiates necessary changes arising out of inadequacies, if any. All financial and audit controls are further reviewed by the Audit Committee of the Board of Directors.

11. Internal Financial Control Systems with reference to financial statements

The Company has a formal system of internal financial control to ensure the reliability of financial & operational information and regulatory & statutory compliances. The Company''s

business processes are enabled by an Enterprisewide Resource Platform (ERP) for monitoring and reporting processes resulting financial discipline and accountability.

12. Enterprise Risk Analysis and Management

The Company''s risk strategy is determined by its risk appetite defined by a series of risk criteria. The criteria are based on sectoral realities, customer circumstances, liquidity available and its earnings target within accepted volatility limits. These criteria provide a reference for our operating divisions.

The Company''s risk management framework comprises a combination of centrally issued policies and divisionally-evolved procedures that are regularly reviewed for their alignment with sectoral dynamics and evolving trends.

The framework encompasses strategy and operations and seeks to proactively identify, address and mitigate existing and emerging risks with the goal of making the business model emerge stronger and business growth becomes sustainable.

The Company has constituted a Risk Management Committee aligned with the requirements of the Companies Act, 2013 and Listing Regulations. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

The Company operates across various product platforms built over the years. Relative advantages and disadvantages of such product verticals are studied and advances are tracked. The Company seeks to address technology gaps through continuous benchmarking of existing manufacturing processes with developments in the industry and in this connection has made arrangements with technology consultants.

Sub-par utilization of capacities may lead to inadequate leverage benefits. The Company is ramping up its marketing efforts towards successful product establishment and market acceptance of its products, exploring development of alternate products and establishing a range of applications.

13. Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Practicing Company Secretary on compliance with Corporate Governance norms forms part of this report as Annexure-H.

14. Corporate Social Responsibility (CSR)

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit to the promotion of worthy causes like education, healthcare, scientific research etc. As a part of the Corporate Social Responsibility program, the Company has undertaken projects in the areas of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure-B.

15. Annual Return

The Annual return in Form MGT-7 is available on the Company''s website at the following link: http://www.shanthigears.com/annual-return/

16. Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that:

a) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures therefrom;

b) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations 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 31^st March, 2024 and of the profit of the Company for the year ended on that date;

c) they 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) they have prepared the annual accounts 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 were operating effectively during the year ended 31^st March, 2024; and

f) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31^st March, 2024.

17. Policy on Appointment and Remuneration of Directors

Pursuant to Section 178 (3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178 (4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http://www.shanthigears.com/ wp-content/uploads/2019/05/SGL-Remuneration-Policy-Mar-2019.pdf

18. Related Party Transactions

All related party transactions that were entered during the year under review were on an arm''s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company''s website http://www. shanthigears.com/wp-content/uploads/2022/09/ SGL-RPT-Policy 1-Apr-2022.pdf

None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

All transactions with Related Parties under the Companies Act, 2013, entered during the financial year were in the ordinary course of business at arm''s length and hence no particulars are required to be entered in the Form AOC-2. Further, all transactions entered into with Related Parties during the year even at arm''s length basis in the ordinary course did not exceed the thresholds prescribed under the Companies (Meetings of Board and its Powers) Rules, 2014 or Listing Regulations or the Company''s Policy in this regard and hence no disclosure was required to be made in Form AOC-2. Accordingly, there are no contracts or arrangements entered into with Related Parties during the year to be disclosed under Sections 188(1) and 134(3)(h) of the Companies Act, 2013 in Form AOC-2. The form is enclosed as Annexure-E.

19. Board Evaluation

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

20. Vigil Mechanism/Whistle Blower Policy

The details of Vigil Mechanism/Whistle Blower policy are given in the Corporate Governance Report.

21. Business Responsibility & Sustainability Reporting

As required under the SEBI Listing Regulations which mandate the inclusion of a Business Responsibility & Sustainability Report as part of the Annual Report for the top 1000 listed entities based on market capitalisation, the Business Responsibility Report forms part of the Annual Report as Annexure G. The Business Responsibility Policy of the Company is displayed in the Company''s website at the following link: http://www.shanthigears.com/wp-content/ uploads/2020/06/SGL-BRR-Policy-May-2020.pdf

22. Declarations/Affirmations

During the year under review:

• there were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate viz., 31^st March, 2024 and the date of this Report; &

• there were no significant material orders passed by the regulators or courts or tribunals impacting the Company''s going concern status and its operations in future.

23. Human Resources

Intellectual capital has been the cornerstone of Shanthi Gear''s sustenance over the years. The Company has a large pool of engineers. This critical competitive edge has enabled the Company to stand out from the clutter and develop niche solutions that address the ever-evolving requirements of the sectors it caters to.

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

Senior leaders have been investing a lot of time and efforts in identifying and developing succession pipeline for critical positions in the organization. The transition management programmes viz., FTF and LEAD have been very successful and as part of the programme, implementation of Individual Development Plans (IDPs) for talent pool identified through these programmes is being facilitated. The IDPs are being reviewed regularly and On-the-Job projects, job enlargement/job rotation, mentoring support to the Talents are being provided. Coaching & mentoring was done for select talent across the organization with an intent of developing future leaders. Internal employees have been given opportunities to take up higher roles and grow in the system under Grow from within Scheme.

The Company had 536 permanent employees on its rolls, as on 31^st March, 2024.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-C.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place a Prevention of Sexual Harassment policy (POSH) in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaints about sexual harassment during the year 2023-24.

26. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s R. Sridharan & Associates, Company Secretaries to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-F. Accordingly, no qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

27. Auditors

The Members have appointed of M/s MSKA & Associates, Chartered Accountants, (Firm Registration No 105047W) the Statutory Auditors of the Company for a period of 5 years from the conclusion of 50^th AGM (2023) till the conclusion of 55^th AGM (2028) subject to ratification of such appointment by members at every AGM. The requirement to place the matter relating to the appointment of auditors for ratification by Members at every AGM has been done away with the Companies (Amendment) Act, 2017 with effect from 7^th May, 2018. Accordingly, no resolution is being proposed for ratification of the appointment of statutory auditors at the Fifty-first AGM.

Mr. B. Venkateswar was appointed as Cost Auditor for the audit of the Cost Accounting records of the Company for the year ended 31^st March, 2025. A resolution seeking Members'' ratification of the Remuneration payable to the Cost Auditor is included in the AGM notice dated 09^th May, 2024. The Cost Audit report will be filed within the stipulated period.

28. Subsidiaries/Associates/Joint Ventures

The Company does not have any subsidiaries/ Associates/Joint Ventures.

29. Secretarial Standards

The Company has duly complied with the applicable Secretarial Standards as required by the Companies Act, 2013.

30. General

The Company has not issued equity shares with differential voting rights or sweat equity shares, there is no reportable event with respect to one

time settlement with any Bank or Financial Institution and no corporate insolvency resolution process was initiated under the Insolvency and Bankruptcy Code, 2016, eitherby or against the Company, before National Company Law Tribunal.

31. Change in Nature of Business

There has been no change in the nature of business during the financial year under review.

32. Other Confirmations

No application under the Insolvency and Bankruptcy Code, 2016 (IBC) was made on the Company during the year. Further, no proceeding under the IBC was initiated or is pending as at 31^st March, 2024. There was no instance of one time settlement with any Bank or Financial Institution.

33. Acknowledgement

The Directors thank all Customers, Vendors, Banks, State Governments and Investors for their continued support to your Company''s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering good performance during the year.

On behalf of the Board M A M Arunachalam

Place: Coimbatore Chairman

Date: 09 May 2024 (DIN-00202958)

---

Mar 31, 2023

The Board is pleased to present the 50th Annual Report together with the audited financial statements for the year ended 31 March 2023.

1. Business Environment

Asian economies are expected to drive most of global growth in 2023, as they benefit from less intense inflationary pressures compared to other regions. In FY 2022-23, the business environment faced numerous challenges impacting growth. These included the Geo-political tension causing energy price surges, rising inflation and disruptions to global supply chains. Nevertheless, the global economy is still projected to grow, (albeit slower than in 2022) with the International Monetary Fund (IMF) forecasting a 2.8% global GDP growth in 2023 compared to 3.4% in 2022. Global headline inflation in the baseline is set to fall from 8.7 percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices but underlying (core) inflation is likely to decline more slowly. Looking ahead to next year, uncertainties arise from factors such as the increased Geo-political tension, and monetary tightening in major economies, which may affect the projected 2.8% global GDP growth.

On the Economy

Indian Economy: The Indian economy is expected to grow at a slower pace in the next financial year, than it did in the previous year. The Reserve Bank of India (RBI) projects that GDP growth will slow down to 6.5% in FY 2023-2024, from 7.2% in FY 2022-2023. The Capital Expenditure of Central Government and crowding in the private Capex is one of the growth driver of the Indian economy in the current year. With an emphasis on infrastructure-intensive sectors like roads and highways, railways, and housing and urban affairs in Budget 2023, the increase in Capex has large-scale positive implications for medium-term growth. The Production Linked Incentive (PLI) schemes were introduced across 14 categories to plug India into global supply chains.

Despite the global challenges, there are positive signs for the Indian economy in FY 2023-2024. There is still a lot of pent-up demand for goods and services and domestic consumption will continue to drive the overall growth.

• Economic trends: The Indian economy is expected to grow at a moderate pace in the next financial

year, supported by strong domestic demand and continued investment. However, any increase in commodity prices and supply chain disruptions could pose challenges.

• Industrial sector: The industrial sector is expected to grow at a slower pace in the next financial year, as some sectors, such as manufacturing, face headwinds from rising input costs and global trade disruptions.

• India''s fiscal deficit position: India''s fiscal deficit is expected to widen in the next financial year, as the government increases spending on infrastructure and social welfare programs. However, the deficit is still expected to be below the 3% of GDP target.

• I ndia''s economic resurgence: India''s economy has rebounded strongly from the COVID-19 pandemic and is now one of the fastest-growing major economies in the world.

Overall, the Indian economy is expected to continue to grow at a moderate pace in the next financial year. The growth will be supported by strong domestic demand, continued investment, and a favorable external environment.

On the Industrial Gear Industry Global prospects: The global industrial gear sector is poised for steady growth, with a projected compound annual growth rate (CAGR) of 5% from 2023 to 2027. This expansion is driven by increasing demand for gears across diverse industries, including automotive, aerospace, and manufacturing.

The aerospace industry, another significant gear consumer, is projected to exhibit a CAGR of 5% from 2023 to 2027. This growth is primarily attributed to escalating demand for commercial aircraft, underscoring the pivotal role of gears within the aerospace gear market.

Simultaneously, the manufacturing industry plays a substantial role in gear consumption and is anticipated to demonstrate a CAGR of 4% from 2023 to 2027. The persistent demand for industrial machinery is expected to be a key driver behind the growth observed in the manufacturing gear market.

The global gear sector presents promising opportunities as it embraces the burgeoning demand from automotive, aerospace, and manufacturing industries. With its steady growth trajectory, the sector is poised to navigate the challenges ahead while capitalizing on the potential for further advancements.

Indian gear sector prospects:

The Indian gear sector is expected to grow at a CAGR of 4-6% from 2023 to 2027. This growth is being driven by the increasing demand for gears in a variety of industries, including aerospace and manufacturing.

The aerospace industry is another major consumer of gears in India and is expected to grow at a CAGR of 9% from 2023 to 2027. The increasing demand for commercial aircraft is expected to drive growth in the aerospace gear market in India.

The manufacturing industry is also a major consumer of gears in India and is expected to grow at a CAGR of 6% from 2023 to 2027. The increasing demand for industrial machinery is expected to drive growth in the manufacturing gear market in India.

Indian government notable initiatives and developments

The Indian government has taken several initiatives to boost the growth of the gear sector in India.

• The Production-Linked Incentive (PLI) Scheme for Gear Manufacturing: The PLI scheme provides financial incentives to gear manufacturers in India. This scheme is expected to attract new investments in the gear sector and boost domestic production of gears.

• The National Manufacturing Policy (NMP): The

NMP aims to make India a global manufacturing hub. The NMP includes several measures to boost the gear sector, such as the development of a national gear park and the promotion of exports of gears.

• The National Investment Manufacturing Zones (NIMZs): The NIMZs are special economic zones that are designed to attract investment in manufacturing. The NIMZs include several gear manufacturing clusters, which are expected to boost the growth of the gear sector in India.

Union Budgets Projection

The Union Budget for the coming financial year is expected to include several measures to boost the growth of the gear sector in India.

The Indian gear sector is expected to grow in the next financial year and this growth is being driven by the increasing demand for gears in a variety of industries, as well as the Indian government''s initiatives to boost the manufacturing sector. All these factors point to one reality, the demand for gears will remain strong over the coming years.

Sector-wise prospects Railway

Indian Railways has made sustained efforts to improve the ease of doing business as well as improve the service delivery at competitive prices which has resulted in new traffic coming to railways from both conventional and non-conventional commodity streams. Demand for High Power

Diesel Locomotives, AC Locos will be on upswing considering the impetus given in the Railway Budget. Vande Bharat Express has gained immense popularity with about 10 Trains running and more poised to be introduced as the high priority areas of Railways. The conventional Electric Multiple Units, Diesel Multiple Units and Diesel Electric Tower car will continue to be produced in Railway Production units of ICF/RCF/ MCF to meet the increasing demands.

Extrusion

India extruded plastic is projected to expand at a CAGR of about 8% in the next 3 years. Extruded plastic market is growing at a faster rate in the country on account of rapid urbanization and expanding middle class group. Government initiatives to boost rural infrastructure is fueling the demand for PVC extrusions in the construction sector. Burgeoning demand for flexible packaging is fueling the growth of PE, PET, and PP extrusions. On the rubber extrusion and rubber machinery front the market is growing rapidly. The rubber extruder market is projected to increase at a CAGR of 5.3% during the forecast period up to 2023.

Crane and Material Handling

The cranes market in India is majorly driven by increasing construction activities. Also, significant investments by governments and private firms in infrastructural activities are positively influencing market expansion. India crane market size will be valued at USD 1.3 billion by 2027, growing at a compound annual growth rate (CAGR) of 5.56% by volume.

In India expansion plans of major Steel manufacturers to enhance capacity by 20 Mio tonnes will increase the demand for high-capacity Cranes for EOT application. Besides the Indian government is anticipated to boost its expenditure on public infrastructure to meet up its aspiring development plans which will spur Gantry and Medium capacity EOT cranes.

Rapid industrialization and increased demand for automation in material handling equipment are

expected to fuel the market growth in this segment.

The ongoing modernization of industrial facilities and infrastructures to improve their production capacity is anticipated to drive the growth of the material handling equipment market.

Cement

India produces over 7% of the world''s installed cement capacity, making it the second-largest cement producer in the world. India currently produces 298 Million Tonnes per Annum of cement at its installed capacity of 500 MTPA

The Indian government unveiled its "PM Gati Shakti - National Master Plan (NMP)" for multimodal connectivity in October 2021. It will include infrastructure initiatives from different Ministries and State Governments, such as UDAN, Bharatmala, Sagarmala, inland waterways and dry/land ports

By FY 2027, the demand for cement in India is anticipated to reach 419.92 Million Tonnes. According to the IMARC report, the CAGR for the cement market in India is predicted to be 4.8% from 2023 to 2027

Steel

India is the second-largest producer of crude steel in the world and plans to triple its production. The industry is witnessing consolidation of players, which has led to investment by entities from other sectors. This consolidation also presents an opportunity to global players to enter the Indian market. Under the Union Budget 2023-24, the government allocated ^70.15 crore (US$ 8.6 million) to the Ministry of Steel. Easy availability of low-cost manpower and presence of abundant iron ore reserves make India competitive in the global set up. India is home to fifth-highest reserves of iron ore in the world.

2. Company Performance		Crores)
Particulars	Year Ended 31.03.2023	Year Ended 31.03.2022
Revenue from Operations(Net)	445.65	337.07
Earnings Before Interest Tax Depreciation & Amortisation	101.07	69.10
Depreciation and amortisation expense	10.88	10.37
Profit Before Tax	90.19	58.73
Less: Tax Expenses	23.38	16.26
Profit After Tax	67.05	42.47
Add: Surplus brought forward	48.18	24.89
Appropriations:
Final dividend paid during the year*
Interim dividend paid during the year*	23.01	19.18
Balance carried to Balance Sheet	92.23	48.18

* The Board has declared and paid Interim Dividend of ^ 3 per equity share and has proposed Final Dividend of ^ 2 per equity share for the financial year 2022-23, which is subject to the approval of the members at the ensuing Annual General Meeting.

4. Review of Operations

In FY 2022-23, the Company reported improved performance for second consecutive year and the company posted its best in terms of Revenue and Profit despite the adverse Global economic factors. Revenue from Operations at ^446 crores, registering a growth of 32% over the previous year. This growth was mainly aided by healthy order inflow and ramp up of production.

Focus on all segment helped in sustaining the competitive advantage. The business continued to build relationships through high levels of customer engagement during the year.

The company focused on lean initiatives and improved the production levels. Capital investments were made wherever technological upgradation was required.

EBITDA increased from ^69.10 crore in FY22 to ^101.07 crores in FY23 - a growth of 46%. The Company registered a net profit of ^67.05 crores (an 58% increase).

From a liquidity standpoint, the Company generated a Free Cash Flow of ^39.17 crore during the financial year and registered 15% growth over the previous year. Free Cash Flow to PAT is 58%.

The Company''s Return on Invested Capital improved to 56% in FY 23 from 36% in FY 22 - aided by increase in utilisation of assets and better working capital management.

The Company remains debt free and invests its surplus funds judiciously balancing safety and returns.

4. Dividend

The Board of Directors declared an Interim Dividend of ^3/- per share (@ 300%) on equity share of face value of ^1/- each for the financial year 2022-23, which was paid on 14^th February, 2023 to all the eligible shareholders. Final dividend of ^2/- per share (@ 200%) has been proposed by the Board for the said financial year and together with the Interim Dividend of ^3/- per equity share, already declared and paid, in respect of the financial year 2022-23, ^5/- per share (@500%) will be considered as the total Dividend for the said financial year.

The dividend pay-out this year got exceeded w.r.t Company''s policy on Dividend Distribution to commemorate the completion of 50 years of Shanthi Gears Limited. The Dividend Policy as approved by the Board is uploaded and is available on the following link on the Company''s website, http://www. shanthigears.com/wp-content/uploads/2021/04/SGL-Dividend-Distribution Policy.pdf.

Details thereof also form part of this Annual Report for the information of shareholders as Annexure A.

5. Share Capital

The paid up Equity Share Capital as on 31^st March, 2023 was ^7.67 Crores.

6. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest was outstanding as on 31^st March, 2023.

7. Particulars of Loans and Guarantees

During the year under review, the Company has not given any loans or guarantees under the provisions of Section 186 of the Companies Act, 2013. As part of treasury management, the Company deploys short-term surplus in units of mutual funds, the details relating to which form part of the Notes to the financial statements provided in this Annual Report.

8. Directors

Mr. Mukesh Ahuja, will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Companies Act, 2013 and being eligible, he offers himself for re-appointment.

Mr. Arun Venkatachalam, has been appointed as Additional Director (Non-Executive Director) on 09^th May, 2023 liable to retire by rotation and he continues upto the ensuing Annual General Meeting. Necessary resolution proposing the appointment of Mr. Arun Venkatachalam as a Director liable to retire by rotation under Sec 152 of the Companies Act, 2013 forms part of this Annual General Meeting.

Mr. S K Sundararaman, Independent Director will hold office up to the date of the ensuing Annual General Meeting. The Board recommends his re-appointment as an Independent Director under Section 149 of the Act for further term of five years from 26^th July, 2023 till 25^th July, 2028 forms part of this Annual General Meeting.

The Board takes pleasure in recommending the appointment of Mr. Arun Venkatachalam as Director and re-appointment of Mr. S K Sundararaman as Independent Director of the Company.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated under the Act. In the opinion of the Board, all the Independent Directors fulfill the conditions specified in the Companies Act, 2013 and Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 and are independent of the Management.

Notice has been received from a Member proposing the candidature of Mr. Arun Venkatachalam as Director and Mr. S K Sundararaman as Independent Director of the Company.

9. Key Managerial Personnel

Mr. C Subramaniam, resigned as Company Secretary w.e.f 31^st January, 2023 to pursue other interests. The Board wishes to place on record the valuable contribution made by Mr. C Subramaniam during his tenure with the Company.

Mr. Walter Vasanth P J, was appointed as Company Secretary of the Company w.e.f 29^th March, 2023.

Mr. M Karunakaran, Whole-time Director, Mr. Walter Vasanth P J, Company Secretary and Mr. Ranjan Kumar Pati, Chief Financial Officer are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

10. Internal Control System and their Adequacy

The Company has an Internal Control System, commensurating with its size, scale and complexity of its operations.

It has a sound system of internal controls in place to ensure the achievement of goals, evaluation of risks, and reliable financial and operational reporting.

This efficient internal control procedure is driven by a robust system of checks and balances that ensures the safeguarding of assets, compliance with all regulatory norms, and procedural and systemic improvements periodically.

The Company uses an ERP (Enterprise Resource Planning) package supported by in-built controls. This guarantees timely financial reporting. The audit system periodically reviews the control mechanism and legal, regulatory, and environmental compliances.

The internal audit team also checks the effectiveness of internal controls and initiates necessary changes arising out of inadequacies, if any. All financial and audit controls are further reviewed by the Audit Committee of the Board of Directors.

11. Internal Financial Control Systems with reference to financial statements

The Company has a formal system of internal financial control to ensure the reliability of financial and operational information, and regulatory and statutory compliances. The Company''s business processes are enabled by an Enterprise-wide Resource Platform (ERP) for monitoring and reporting processes resulting financial discipline and accountability.

12. Enterprise Risk Analysis and Management

The Company''s risk strategy is determined by its risk appetite defined by a series of risk criteria. The criteria are based on sectoral realities, customer circumstances, liquidity available and its earnings target within accepted volatility limits. These criteria provide a reference for our operating divisions.

The Company''s risk management framework comprises a combination of centrally issued policies and divisionally-evolved procedures that are regularly reviewed for their alignment with sectoral dynamics and evolving trends.

The framework encompasses strategy and operations and seeks to proactively identify, address and mitigate existing and emerging risks with the goal of making the business model emerge stronger and business growth becomes sustainable.

The Company has constituted a Risk Management Committee aligned with the requirements of the Companies Act, 2013 and Listing Regulations. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

The Company operates across various product platforms built over the years. Relative advantages and disadvantages of such product verticals are studied and advances are tracked. The Company seeks to address technology gaps through continuous benchmarking of existing manufacturing processes with developments in the industry and in this connection has made arrangements with technology consultants.

Sub-par utilization of capacities may lead to inadequate leverage benefits. The Company is ramping up its marketing efforts towards successful product establishment and market acceptance of its products, exploring development of alternate products and establishing a range of applications.

13. Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Practicing Company Secretary on compliance with Corporate Governance norms forms part of this report as Annexure H.

14. Corporate Social Responsibility (CSR)

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research etc.

As a part of Corporate Social Responsibility program, the Company has undertaken projects in the area of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure B.

15. Annual Return

The Annual return in Form MGT-7 is available on the Company''s website at the following link: http://www. shanthigears.com/annual-return/

16. Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that:

a. In the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures therefrom;

b. They have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations 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 31^st March, 2023 and of the profit of the Company for the year ended on that date;

c. They 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. They have prepared the annual accounts 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 were operating effectively during the year ended 31^st March, 2023; and

f. Proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31^st March, 2023.

17. Policy on Appointment and Remuneration of Directors

Pursuant to Section 178 (3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178 (3) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http://www.shanthigears.com/ wp-content/uploads/2019/05/SGL-Remuneration-Policy-Mar-2019.pdf

18. Related Party Transactions

All related party transactions that were entered during the year under review were on an arm''s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company''s website http://www.shanthigears.com/wp-content/ uploads/2022/09/SGL-RPT-Policy 1 -Apr-2022.pdf

None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

All transactions with Related Parties under the Companies Act, 2013, entered during the financial year were in the ordinary course of business at arm''s length and hence no particulars are required to be entered in the Form AOC-2. Further, all transactions entered into with Related Parties during the year even at arm''s length basis in the ordinary course did not exceed the thresholds prescribed under the Companies (Meetings of Board and its Powers) Rules, 2014 or Listing Regulations or the Company''s Policy in this regard and hence no disclosure was required to be made in Form AOC-2. Accordingly, there are no contracts or arrangements entered into with Related Parties during the year to be disclosed under Sections 188(1) and 134(3) (h) of the Companies Act, 2013 in Form AOC-2. The form is enclosed as Annexure E.

19. Board Evaluation

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

20. Vigil/Whistle Blower Policy

The details of vigil mechanism/Whistle Blower policy are given in the Corporate Governance Report.

21. Business Responsibility & Sustainability Reporting

As required under the SEBI Listing Regulations which mandate the inclusion of a Business Responsibility & Sustainability Report as part of the Annual Report for the top 1000 listed entities based on market capitalisation, the Business Responsibility Report forms part of the Annual Report as Annexure G. The Business Responsibility Policy of the Company is displayed in the Company''s website at the following link: http://www.shanthigears.com/wp-content/ uploads/2020/06/SGL-BRR-Policy-May-2020.pdf

22. Declarations/Affirmations

During the year under review:

• There were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate viz., 31^st March, 2023 and the date of this Report;

• There were no significant material orders passed by

the regulators or courts or tribunals impacting the Company''s going concern status and its operations in future.

23. Human Resources

Intellectual capital has been the cornerstone of Shanthi Gear''s sustenance over the years. The Company has a large pool of engineers. This critical competitive edge has enabled the Company to stand out from the clutter and develop niche solutions that address the ever-evolving requirements of the sectors it caters to.

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

Senior leaders have been investing lot of time and efforts in identifying and developing succession pipeline for critical positions in the organization. The transition management programmes viz., FTF and LEAD have been very successful and as part of the programme, implementation of Individual Development Plans (IDPs) for talent pool identified through these programmes is being facilitated. The IDPs are being reviewed regularly and On-the-Job projects, job enlargement/job rotation, mentoring support to the Talents are being provided. Coaching & mentoring was done for select talent across the organization with an intent of developing future leaders. Internal employees have been given opportunities to take up higher roles and grow in the system under Grow from within Scheme.

The Company had 536 permanent employees on its rolls, as on 31^st March, 2023.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure C.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure D.

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

The Company has in place a Prevention of Sexual Harassment policy (POSH) in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint about sexual harassment during the year 2022-23.

26. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. R Sridharan & Associates, Company Secretaries to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure F Accordingly, no qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

27. Auditors

As per the provisions of Section 139 of the Companies Act, 2013, the term of Office of M/s Deloitte Haskins

& Sells, Chartered Accountants (Firm Registration No. 008072S), Chartered Accountants come to an end at the close of the 50^th Annual General Meeting of the Company.

The Board of Directors wish to place on record their sincere appreciation for the services rendered by M/s.Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors of the Company, during their tenure with the Company.

Subject to the approval of the Members of the Company at the ensuing 50^th Annual General Meeting, the Board of Directors has recommended the appointment of M/s. MSKA & Associates, Chartered Accountants as Statutory Auditors of the Company pursuant to Section 139 of the Companies Act, 2013. The Audit Committee at its meeting held on 09^th May, 2023 had recommended their appointment as Statutory Auditors pursuant to Section 139 (11) of the Companies Act, 2013. Written consents from the incoming Auditors have been obtained, confirming that they satisfy the legal requirements for their appointment. The proposal relating to their appointment has been included in the notice convening the 50^th Annual General Meeting of the Company. They shall hold office from the conclusion of 50^th Annual General Meeting till the conclusion of 55^th Annual General Meeting.

The report of Statutory Auditors viz., M/s.Deloitte Haskins & Sells, Chartered Accountants, for the year ended 31^st March, 2023 does not contain any qualification, reservation or adverse remark and no instance of fraud has been reported by Auditors under Section 143(12) of Companies Act, 2013.

Mr. B. Venkateswar was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31^st March, 2024. A resolution seeking Members'' ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 09^th May, 2023. The Cost Audit report will be filed within the stipulated period.

28. Subsidiaries/Associates/Joint Ventures

The Company does not have any subsidiaries/ Associates/Joint Ventures.

29. Secretarial Standards

The Company has duly complied with the applicable Secretarial Standards as required by the Companies Act, 2013.

30. General

The Company has not issued equity shares with differential voting rights or sweat equity shares, there is no reportable event with respect to one time settlement with any Bank or Financial Institution and no corporate insolvency resolution process was initiated under the Insolvency and Bankruptcy Code, 2016, either by or against the Company, before National Company Law Tribunal.

31. Change in Nature of Business

There has been no change in the nature of business during the financial year under review.

32. Acknowledgement

The Directors thank all Customers, Vendors, Banks, State Governments and Investors for their continued support to your Company''s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year.

---

Mar 31, 2022

Your Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March 2022

1. Business Environment

The Business environment during FY22¹ was competitive mainly in the first half year. The last two years have been difficult for the world economy on account of the COVID-19 pandemic. Repeated waves of infection, supply-chain disruptions and Global inflation have made the policy-making more challenging. Further the war in Ukraine has triggered a costly crisis that demands a peaceful resolution. At the same time, economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Global growth is projected to slow from an estimated 6.1% in 2021² to 3.6% in 2022 and 2023

On the Economy

Global Economy: In 2021, the global economy resurged with strength. The global GDP increased by 6.1% against a contraction of 3.1% in 2020. This stellar performance was primarily due to the fiscal support given by nations across the globe (particularly the advanced economies), the widespread vaccination in advanced and developing and emerging markets,

the lifting of lockdown restrictions in many countries and the renewal of commercial activities across the globe.

Global trade climbed to US$28.5 trillion in 2021 surpassing the pre-pandemic level of 2019 by 13%. Global trade in services rose by US$50 billion to touch US$1.6 trillion.

Global manufacturing production increased by 9.4% in 2021 after a 4.2% contraction in the previous year. The world was all set to sustain its momentum in the current year only to be thwarted by the global geopolitical crisis. This challenge has further intensified prevailing supply-chain issues, in addition to leading to a significant rise in food, fuel and commodity prices, dampening the prospects of sustaining the global economic recovery. The effect of inflation is expected to be more on emerging and developing nations than on advanced economies.

The International Monetary Fund in its document dated April 2022, has reduced its global GDP growth estimates for 2022 and 2023 to 3.6%.

Indian Economy: Aligned with the global trend, the Indian economy reported a healthy reversal in the economic trend as India’s GDP grew by 8.7% in FY22 against a contraction of 6.6% in FY21.

While the agriculture segment improved its performance (from a 3.6% growth in FY21 to a 3.9% growth in FY22), the important thrust to the economy came from the industrial sector (growth of 11.8% in FY22 against a contraction of 2.8% in FY21) and the services sector (growth of 8.2% in FY22 against a contraction of 7.8% in FY21).

The keen thrust on vaccination drives across the Indian landmass helped drive fear out of the minds of Indians. Further, the Government’s favourable policies attracted significant investment by the private sector which resulted in a significant uptick in industrial and services activity across the nation. Exports reached a new pinnacle as the world looked upon India as a key supply partner in the wake of global supply chain disruption.

India’s fiscal deficit position improved to 6.7% of the GDP over the revised budget estimate of 6.9% mainly on account of higher tax realisation.

India’s economic resurgence would have been more pronounced had it not been for the geopolitical crisis that erupted towards the close of the fiscal. The resultant inflationary pressure from this crisis weighed on India’s performance in the last quarter of FY22. It will continue to do so in FY23.

As a result, the Reserve Bank of India (RBI) has lowered its estimate for India’s GDP growth in FY23 from the earlier 7.8%

to 7.2%. Despite this drop, India is expected to remain the fastest growing major economy in the world.

On the Industrial Gear Industry

Global gear sector prospects: The global industrial gearbox market was worth US$26.17 billion in 2020. It is anticipated to be around US$38.10 billion in 2028 with a CAGR of 4.5% during the 2021-28 period. The pandemic has, to some extent, derailed these estimates.

What are gears? Gears are mechanical devices that are used to transmit motion and torque through engagement with other gears, shafts, or some other parts. Gears can be standardised as well as highly customisable too. The applications for industrial gears are diverse and they can be used everywhere where speed reduction, speed increase, power transmission, motion transmission, and force reduction are needed.

A gearbox is an enclosed system of collection of gears that put the gears in a usable format. Gearboxes can be used in many different devices for a wide range of applications. These machines can be found attached to cooling towers or conveyor belts among many other machines. Many large industries such as paper, cement, sugar and steel use a mix of these gearboxes depending on their functionality.

Needed as speed reducers, planetary gears are mainly used in motorised wheels, automatic door openers, conveyors, fluid transfer, appliances, tools and robotics.

Helical gearboxes are used with winding tooth lines and parallel shafts. A worm gear motor is used in heavy-duty operations such

2. Company Performance		(H Crores)
Particulars	Year ended 31.03.2022	Year ended 31.03.2021
Revenue from operations (Net)	337.07	215.53
Earnings Before Interest Tax Depreciation & Amortisation	69.10	34.93
Depreciation and amortisation expense	10.37	8.86
Profit Before Tax	58.73	26.07
Less: Tax Expenses	16.26	5.90
Profit After Tax	42.47	20.17
Add: Surplus brought forward	24.89	16.23
Appropriations:
Final dividend paid during the year
Tax on Final dividend paid during the year
Interim dividend paid during the year	19.18	11.51
Tax on Interim dividend paid during year
Balance carried to Balance Sheet	48.18	24.89

as fertilizers, chemical and minerals and is used for increased speed reduction between non-intersecting crossed axis shafts.

Indian gear sector prospects: India, an agricultural economy till now, is steadily taking giant strides toward an industrial world. Manufacturing has emerged as one of the high-growth sectors in India. The Prime Minister of India launched the ‘Make in India’ program to place India on the world map as a manufacturing hub and give global recognition to the Indian economy.

The Government of India has taken several initiatives to promote a healthy environment for the growth of the manufacturing sector in the country. Some of the notable initiatives and developments are:

The PLI Scheme: Production-linked incentive (PLI) schemes are a cornerstone of the government’s push for achieving an Atmanirbhar Bharat. The objective is to make India’s domestic manufacturing globally competitive and to create global champions in manufacturing. The Union Budget 2022 detailed an outlay of H1.97 Lakh Crores over five years for the PLI Schemes in 13 key sectors.

The Union Budget 2023: The MSME sector received a boost with the extension of ECLGS and an increased guarantee cover of H50,000 crore (US$ 6.55 billion).

The Union Budget 2022: This budget document promised to enhance India’s domestic growth in manufacturing, trade and other sectors. The development of a robust infrastructure, logistics and utility environment for the manufacturing sector is a primary focus field.

All these factors point to one reality, the demand for gears will remain strong over the coming years.

Sector-wise prospects

Infrastructure: The Government plans to invest about H102 lakh crore on infrastructure projects by FY25. During fiscals 2020 to 2025, sectors such as Energy (24%), Roads (19%), Urban (16%), and Railways (13%) amount to around 70% of the projected capital expenditure on infrastructure in India. The infrastructure in India is estimated to grow at an approximate 7% CAGR up to FY25.

The urban transport solution: India is planning to spend US$507 billion to build urban transport solutions and interstate

expressways in the next 10 years, out of which US$151 billion will be spent to build sub-urban and metro systems in 100 Indian cities and more than US$100 billion for building highspeed rail networks. In addition to that, US$256 billion will be spent on expressways.

Steel: The Indian steel industry is a modern cutting-edge establishment that strives for a continuous increase in excellence and quality. Recently, it has emerged as the second largest steel producer in the world, going past Japan. In keeping with the growing investment in infrastructure, steel demand is expected to grow multi-fold over the next decade — from 106 Mn T in FY22 to 230 Mn T by FY31. Further, in July 2021, the Union Cabinet approved an H6,322 crore PLI scheme to boost the production of specialty steel in India.

Cement: The prospects of the cement sector are closely dovetailed with the development of infrastructure. Owing to the aggressive thrust by the Government on developing world-class infrastructure, the prospects of the cement industry appear particularly positive. India’s overall cement production in FY21 was 294.4 million tonne (MT)- this is expected to reach 419.92 MT in FY27.

Crane and Material Handling: Indian material handling equipment market is part of the much bigger Indian manufacturing scenario. The crane market in India was worth $922 million in 2021 which is expected to grow to $1,248 million in FY27 with a CAGR of 5.3% between 2022 and 2027. Additionally, the rapid growth of the warehousing sector is expected to provide impetus to this growth of this business space.

Railway: Demand from Electric Locomotive, Electric Multiple Units, High-Speed Trains and Diesel Multiple Un its & Diesel Electric Towers Cars will witness a surge in demand due to aggressive Production Plans announced by the Railway Board wherein there are plans to add 40% additional capacity annually. The Make in India Initiative for the Vande Bharat Express will be a game changer for the Indian Railways.

Extrusion: The escalating demand for extruded plastic products in the consumer goods, packaging, automotive, and construction sectors is primarily driving the plastic extrusion machines market. Additionally, the shifting preferences towards automated plastic processing and manufacturing are further catalysing the market growth. Besides this, the elevating requirement for these processes in manufacturing fixed crosssectional products with high accuracy is also augmenting the global market. In India, this segment is expected to grow by 4.5% up to FY27.

3. Review of Operations

In FY22, the Company reported improved performance. Revenue from Operations at H337 Crore, registering a growth of 56% growth over the previous year. This growth was owing to an increase in order inflow and deliveries.

Focus on Service and Replacement segment in power transmission helped in sustaining the competitive advantage. The business continued to build relationships through high levels of customer engagement during the year.

Specific attention is given to development of alternate materials and processes to drive value addition and cost reduction. Capital investments were made wherever technological upgradation was required.

EBITDA increased from H34.9 Crore in FY21 to H69.1 Crore in FY22 - a growth of 98%. The Company registered a net profit of H42.5 Crore (an 111% increase).

From a liquidity standpoint, the Company generated a Free Cash Flow of H34.1 Crore during the financial year and registered 61% growth over the previous year. Free Cash Flow to PAT is 80%.

The Company’s Return on Invested Capital improved to 36% in FY22 from 15% in FY21 — this showcased the better utilisation of every rupee invested in the business.

The Company remains debt free and invests its surplus funds judiciously balancing safety and returns.

4. Dividend

The Company has declared an interim dividend of H2.5/- per equity share of Face Value H1/- in February, 2022 and paid during February 2022. The Board has not recommended any final dividend for FY22 and the interim dividend already declared and paid will be considered as the Dividend for the FY22.

The dividend pay-out is in accordance with the Company’s policy on Dividend Distribution. The said Policy as approved by the Board is uploaded and is available on the following link on the Company’s website,http://www. shanthigea.rs.com/wp-content/uploa.ds/2021/04/SGL-Dividend-Distribution-Policy.pdf.

Details thereof also form part of this Annual Report for the information of shareholders as Annexure—A.

of the Companies Act affirming that they meet the criteria of independence as stipulated under the Companies Act. In the opinion of the Board, all the Independent Directors fulfill the conditions specified in the Companies Act, 2013 and Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 and are independent of the Management.

9. Key Managerial Personnel

Mr. M Karunakaran, Whole-time Director, Mr. C Subramaniam, Company Secretary and Mr. Ranjan Kumar Pati, Chief Financial Officer are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

10. Internal Control System and their Adequacy

The Company has an Internal Control System, Commensurating with its size, scale and complexity of its operations.

It has a sound system of internal controls in place to ensure the achievement of goals, evaluation of risks, and reliable financial and operational reporting.

This efficient internal control procedure is driven by a robust system of checks and balances that ensures the safeguarding of assets, compliance with all regulatory norms, and procedural and systemic improvements periodically.

The Company uses an ERP (Enterprise Resource Planning) package supported by in-built controls. This guarantees timely financial reporting. The audit system periodically reviews the control mechanism and legal, regulatory, and environmental compliances.

The internal audit team also checks the effectiveness of internal controls and initiates necessary changes arising out of inadequacies, if any. All financial and audit controls are further reviewed by the Audit Committee of the Board of Directors.

11. Internal Financial Control Systems with reference to financial statements

The Company has a formal system of internal financial control to ensure the reliability of financial and operational information, and regulatory and statutory compliances. The Company’s business processes are enabled by an Enterprise-wide Resource Platform (ERP) for monitoring and reporting processes resulting financial discipline and accountability.

5. Share Capital

The paid up Equity Share Capital as on 31 March 2022 was H7.67 Crores.

6. Deposits

The Company has not accepted any fixed deposits under Chapter V of the Companies Act, 2013 and as such no amount of principal and interest was outstanding as on 31 March 2022.

7. Particulars of Loans, Guarantees

During the year under review, the Company has not given any loans or guarantees under the provisions of Section 186 of the Companies Act, 2013. As part of treasury management, the Company deploys short-term surplus in units of mutual funds, the details relating to which form part of the Notes to the financial statements provided in this Annual Report.

8. Directors

Mr. M.A.M. Arunachalam will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Companies Act,2013 and being eligible, he offers himself for re-appointment.

Mr. Mukesh Ahuja was appointed as Additional Director (Non-Executive Director) on 22 October 2021, liable to retire by rotation and he continues upto the ensuing Annual General Meeting (AGM). Necessary resolution proposing the appointment of Mr. Mukesh Ahuja as a Director liable to retire by rotation under Section 152 of the Companies Act, 2013 forms part of the Notice for the ensuing AGM.

The Board recommends the appointment of Mr. L Ramkumar, Present Non-Executive Director as Independent Director under section 149 of the Companies Act, 2013 for a term of four years viz. from the date of the 49^th AGM (2022) till the date of 53^rd AGM (2026).

Notice has been received from a Member proposing the candidature of Mr. Mukesh Ahuja as Director and Mr. L Ramkumar as Independent Director of the Company.

The Board takes pleasure in recommending the appointment of Mr. Mukesh Ahuja as Director and Mr. L Ramkumar as Independent Director of the Company at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6)

12. Enterprise Risk Analysis and Management

The Company’s risk strategy is determined by its risk appetite defined by a series of risk criteria. The criteria are based on sectoral realities, customer circumstances, liquidity available and its earnings target within accepted volatility limits. These criteria provide a reference for our operating divisions.

The Company’s risk management framework comprises a combination of centrally issued policies and divisionally-evolved procedures that are regularly reviewed for their alignment with sectoral dynamics and evolving trends.

The framework encompasses strategy and operations and seeks to proactively identify, address and mitigate existing and emerging risks with the goal of making the business model emerge stronger and business growth becomes sustainable.

The Company has constituted a Risk Management Committee aligned with the requirements of the Companies Act, 2013 and Listing Regulations. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

The Company operates across various product platforms built over the years. Relative advantages and disadvantages of such product verticals are studied and advances are tracked. The Company seeks to address technology gaps through continuous benchmarking of existing manufacturing processes with developments in the industry and in this connection has made arrangements with technology consultants.

Sub-par utilization of capacities may lead to inadequate leverage benefits. The Company is ramping up its marketing efforts towards successful product establishment and market acceptance of its products, exploring development of alternate products and establishing a range of applications.

13. Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms part of this report as Annexure-G.

14. Corporate Social Responsibility (CSR)

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner.

The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research etc. As a part of Corporate Social Responsibility program, the Company has undertaken projects in the area of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure-B.

15. Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual return as on 31 March 2022 is available on the Company’s website at the following link:httpj// www.sha.nthigea.rs.com/wp-content/uploads/ 2022/04/

Form MGT 7-2022.pdf

16. Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that:

a) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures therefrom;

b) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations 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 31 March 2022 and of the profit of the Company for the year ended on that date;

c) they 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) they have prepared the annual accounts 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 were operating effectively during the year ended 31 March 2022; and

f) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31 March 2022.

17. Policy on Appointment and Remuneration of Directors

Pursuant to Section 178(3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178 (4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http:// www.sha.nthigears.com/wp-c.ontent/uploads /2019/05/

SGL,-Remunera.tion-Policy-Ma.r-2019.pdf

18. Related Party Transactions

All related party transactions that were entered during the year under review were on an arm’s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company’s website http://www. sha.nthigea.rs.c.om/wp-c.ontent/uploa.ds/2019/05/SGL,-RPT-Policy-Mar-2019.pdf

None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

19. Board Evaluation

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

20. Vigil Mechanism/ Whistle Blower Policy

The details of vigil mechanism/Whistle Blower policy is given in the Corporate Governance Report.

21. Business Responsibility Reporting

As required under the SEBI Listing Regulations which mandate the inclusion of a Business Responsibility Report as part of the Annual Report for the top 1000 listed entities based on market capitalisation, the Business Responsibility Report forms part of the Annual Report as Annexure-F. The Business Responsibility Policy of the Company is displayed in the Company’s website at the following link:

To be updated

22. Declarations/Affirmations

During the year under review:

- there were no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate viz., 31 March 2022 and the date of this Report; &

- there were no significant material orders passed by the regulators or courts or tribunals impacting the Company’s going concern status and its operations in future.

23. Human Resources

Intellectual capital has been the cornerstone of Shanthi Gear’s sustenance over the years. The has a large pool of engineers. This critical competitive edge has enabled the Company to stand out from the clutter and develop niche solutions that address the ever-evolving requirements of the sectors it caters to.

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

Senior leaders have been investing lot of time and efforts in identifying and developing succession pipeline for critical positions in the organization. The transition management programmes viz., FTF and LEAD have been very successful and as part of the programme, implementation of Individual Development Plans (IDPs)for talent pool identified through these programmes is being facilitated. The IDPs are being reviewed regularly and On-the-Job projects, job enlargement /job rotation, mentoring support to the Talents are being provided. Coaching & mentoring was done for select talent across the organization with an intent of developing future leaders. Internal employees have

been given opportunities to take up higher roles and grow in the system under Grow from within Scheme.

The Company had 533 permanent employees on its rolls, as on 31 March 2022.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-C.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the datWwe of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place a Prevention of Sexual Harassment policy (POSH) in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint about sexual harassment during FY22.

26.Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. R Sridharan Associates, Company Secretaries to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-E. The Company has ensured compliance of the Secretarial Standards issued by the Institute of Company Secretaries of India during the period under review. Accordingly, no qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

27.Auditors

The Members have appointed M/s Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 008072S) the Statutory Auditors of the Company for a period of 5 years from the conclusion of 45^th AGM (2018) till the conclusion of 50^th AGM (2023) subject to ratification of such appointment by members at every AGM. The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from 7 May 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the Forty-ninth AGM.

Mr. B. Venkateswar was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31 March 2023. A resolution seeking Members’ ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 7 May 2022. The Cost Audit report will be filed within the stipulated period.

The Directors thank all Customers, Vendors, Banks, State Governments and Investors for their continued support to your Company’s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year.

---

Mar 31, 2019

BOARD’S REPORT & MANAGEMENT DISCUSSION AND ANALYSIS

Dear Shareholders,

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March 2019

COMPANY PERFORMANCE Rs, Crores

PARTICULARS	YEAR ENDED 31.03.2019	YEAR ENDED 31.03.2018
Revenue from operations (Net)	242.97	219.55
Earnings Before Interest Tax Depreciation & Amortization	53.08	48.73
Depreciation and Amortization expense	10.62	15.56
Profit Before Tax	42.46	33.17
Less : Tax expense	9.11	4.59
Profit After Tax	33.35	28.58
Add : Surplus brought forward	34.71	32.33
Appropriations :
Transferred to General reserve	-	9.00
Final dividend paid during the year	-	6.13
Tax on Final dividend paid during the year	-	1.24
Interim dividend paid during the year	40.86	8.17
Tax on Interim dividend paid during the year	8.40	1.66
Balance carried to Balance Sheet	18.80	34.71

Review of Operations

During the year the business registered a top-line growth of 14% to Rs, 243 Crores aided by growth in revenues, the profit after tax grew by 17% to Rs, 33.4 Crores. The business continued to build relationships through high levels of customer engagement during the year. Focus on Servicing and Solution expertise in power transmission helped in sustaining the competitive advantage.

Conscious effort on cash generation helped us to sustain the reduced net working capital levels of previous year. In its endeavor to build sustainable business, the Company continued its journey on certifications and became the first Asian Company to get IRIS (International Railway Industry Standard) certification.

Specific attention is given to development of alternate materials and processes to drive value addition and cost reduction. Consolidation of operations is on-going, in a phased manner. Capital investments were made wherever technological up gradation was required.

The Company remains debt free and invests its surplus funds judiciously balancing safety and returns.

Management Discussion and Analysis

The Management Discussion and Analysis, which forms part of this report, sets out an analysis of the business, the industrial scenario and the performance of the Company.

Dividend

The Board of Directors has recommended a final Dividend of Rs,1/- (Rupee one only) per share on equity share of face value of Rs,1 /- each for the financial year ended 31 March 2019. Together with the one-time special interim dividend of Rs,5/-per share, paid on 14 January 2019, the total dividend for the year works out to Rs,6/-per share on the equity share of face value of Rs,1/- each. The final dividend, if approved by the shareholders, will be paid after 23 July 2019.

Buyback

The Board, at its meeting on 26 December 2018, approved a proposal for the Company to buy back its fully paid-up equity shares of face value of Rs,1/- each from the eligible equity shareholders of the Company for an amount not exceeding Rs,70 Crores. The shareholders approved the said proposal of buyback of equity shares through the postal ballot that concluded on 29 January 2019. The buyback offer comprised the purchase of 50 Lakhs equity shares aggregating 6.12% of the paid-up equity share capital of the Company at a price of Rs,140/- per equity share. The buyback was offered to all eligible equity shareholders of the Company as on the record date (i.e., 08 February, 2019) on a proportionate basis through the ''Tender offer'' route. The Company concluded the buyback procedures on 09 April 2019 and 50 Lakhs equity shares were extinguished on the same day.

One-time Special Interim Dividend and the buyback have been done after taking into consideration the fund requirements for its growth plans in the coming years.

Directors

Mr. L Ramkumar will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Companies Act, 2013 and being eligible, he offers himself for re-appointment.

Mr. Vellayan Subbiah was appointed as Additional Director (Non-Executive Director) on 01 February 2019, liable to retire by rotation and he continues up to the ensuing Annual General Meeting (AGM). Necessary resolution proposing the appointment of Mr. Vellayan Subbiah as a Director liable to retire by rotation under Section 152 of the Companies Act, 2013 forms part of the Notice for the ensuing AGM.

Mr. Krishna Samaraj was appointed as Additional Director on25 March 2019 under Section 149 of the Companies Act, 2013. He holds office up to the date of the ensuing AGM. The Board recommends his appointment as Independent Director under section 149 of the Companies Act, 2013 for a term of five years viz. from the date of the 46^th AGM (2019) till the date of 51" AGM (2024).

Mr. J Balamurugan was appointed as an Independent Director. He holds office up to the date of the ensuing Annual General Meeting. The Board recommends his re-appointment as an Independent Director under Section 149 of the Act for further term of five years viz., from the date of 46* AGM (2019) till the date of the 51" AGM (2024).

Notice has been received from a Member proposing the candidature of Mr. Vellayan Subbiah as Director and Mr. Krishna Samaraj and Mr. J Balamurugan as Independent Directors of the Company.

The Board takes pleasure in recommending the appointment of Mr. L Ramkumar, Mr. Vellayan Subbiah as Directors and Mr. Krishna Samaraj and Mr. J Balamurugan as Independent Directors of the Company at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated under the Act.

In the opinion of the Board, all the Independent Directors fulfill the conditions specified in the Companies Act, 2013 and Rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 and are independent of the Management.

Key Managerial Personnel

Mr. Rajiv Narayanamoorthy, resigned as Chief Executive Officer with effect from 01 February 2019 as he wishes to pursue other interests. The Board wishes to place on record valuable contribution made by Mr. Rajiv Narayanamoorthy during his tenure with the Company.

Mr. M Karunakaran was appointed as Chief Executive Officer of the Company with effect from 01 February 2019.

Mr. M Karunakaran, Chief Executive Officer, Mr. B Balamurugan, Chief Financial Officer and Mr. C Subramaniam, Company Secretary are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

Internal Control System and their Adequacy

The Company has an Internal Control System, Commensurating with its size, scale and complexity of its operations. Audit Committee reviews internal audit reports and oversees the internal control system of the Company.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms part of this report.

Corporate Social Responsibility (CSR)

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research etc. As a part of Corporate Social Responsibility program, the Company has undertaken projects in the area of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure-A.

Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure-C.

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that:

i) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures therefrom;

ii) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations 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 31 March 2019 and of the profit of the Company for the year ended on that date;

iii) they 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;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended 31 March 2019; and

vi) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31 March 2019.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178 (3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178 (4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http: //www. shanthigears. com/wp-content/uploads/2019 705/SGL-Remuneration-Policy-Mar-2019.pdf

Related Party Transactions

All related party transactions that were entered during the year under review were on an arm''s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company''s website http://www.shanthigears.com/wp-content/uploads/2019/ 05/SGL-RPT-Policy-Mar-2019 .pdf

None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

Board Evaluation

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Vigil Mechanism/ Whistle Blower Policy

The details of vigil mechanism/Whistle Blower policy is given in the Corporate Governance Report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

Senior leaders have been investing a lot of time and efforts in identifying and developing succession pipeline for critical positions in the organization. The transition management programmes viz., FTF and LEAD have been very successful and as part of the programme, implementation of Individual Development Plans (IDPs) for talent pool identified through these programmes is being facilitated. The IDPs are being reviewed regularly and On-the-job projects, job enlargement / job rotation, mentoring support to the target group are being provided. Coaching & mentoring was done for select talent across the organization with an intent of developing future leaders. Internal employees have been given opportunities to take up higher roles and grow in the system.

The Company had 541 permanent employees on its rolls, as on 31 March 2019.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-B.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place an anti-sexual harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint about sexual harassment during the year 2018-19.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M R L Narasimha, Practicing Company Secretary to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-E. The Company has ensured compliance of the Secretarial Standards issued by the Institute of Company Secretaries of India during the period under review. Accordingly, no qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

Auditors

The Members have appointed M/s Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 008072S) the Statutory Auditors of the Company for a period of 5 years from the conclusion of 45^th AGM (2018) till the conclusion of 50^th AGM (2023).

Mr. B. Venkateswar was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31 March 2020. A resolution seeking Members'' ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 29 April 2019. The Cost Audit report will be filed within the stipulated period.

The Directors thank all Customers, Vendors, Banks, State Governments and Investors for their continued support to your Company''s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year.

On behalf of the Board

L Ramkumar

Coimbatore

Chairman

29 April 2019 DIN-00090089

---

Mar 31, 2018

Dear Shareholders,

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March 2018

COMPANY PERFORMANCE

Rs. Crores

PARTICULARS	YEAR ENDED	YEAR ENDED
	31.03.2018	31.03.2017
Revenue from Operations (Net)	219.55	203.82
Earnings Before Interest, Tax, Depreciation & Amortisation	48.73	46.33
Depreciation & Amortisation Expense	15.56	17.83
Profit Before Tax	33.17	28.50
Less: Tax Expense	4.59	5.99
Profit After Tax	28.58	22.51
Add: Surplus brought forward	32.33	15.82
Appropriations :
Transfer to General Reserve	9.00	6.00
Final Dividend for 2016-17 paid	6.13	-
Tax on Final Dividend	1.25	-
Interim Dividend for 2017-18 paid	8.17	-
Tax on Interim Dividend	1.67	-
Balance carried to Balance Sheet	34.69	32.33

Review of Operations

In 2017-18, your Company registered a topline growth of 16% to Rs.209.1 Crores aided by growth in revenues, the profit after tax grew by 27% to Rs.28.6 Crores. The business continued to build relationships through high levels of customer engagement during the year through the Connect programs. New Product Development and Import Substitution helped in sustaining the competitive advantage.

Focus on lean principles helped the business to reduce the net working capital by 14%. In its endeavor to build sustainable business, your Company embarked on certifications such as IMS (QMS, EMS and OHSAS) coupled with approvals from Defence, Industrial Scientific Research and Aerospace.

Significant number of VAVE projects were taken up to meet cost reduction through improvement in material efficiencies and labour productivity. Focus continued to be on consolidation of operations and maximizing returns on the investments made in the earlier years. Capital investments were made in core value add areas to debottleneck capacities.

Management Discussion and Analysis

The Management Discussion and Analysis, which forms part of this report, sets out an analysis of the business, the industrial scenario and the performance of the Company.

Dividend

The Company has declared an interim dividend of Rs.1/- per equity share of Face Value Rs.1/- in February, 2018 (PY Rs.0.75/- per share). The same has been treated as final dividend.

Directors

Mr. M M Murugappan, Chairman resigned from the Board due to his other commitments with effect from 2 November 2017. The Board places on record its appreciation on the service rendered by Mr. M M Murugappan during his tenure as Chairman of the Board.

Mr. C R Swaminathan, Non-Executive Independent Director will retire at the ensuing Annual General Meeting under Section 149 of the Companies Act, 2013 (“the Act’). The Board places on record its appreciation of the service rendered by Mr. C R Swaminathan during his tenure as Director of the Company.

During the year the Company appointed Mr. S K Sundararaman as an Additional Director of the Company under Section 149 of the Companies Act, 2013 with effect from 6 February 2018. He holds office up to the date of the ensuing AGM. He has wide experience in the field of Textile Technology and well known for his innovative approach and Development of new technical textile products. His knowledge and experience will be of benefit to the Company. The Board recommends his appointment as Independent Director under section 149 of the Companies Act, 2013 for a term of five years viz. from the date of the 45^th AGM (2018) till the date of 50^th AGM (2023).

Notice has been received from a Member proposing the candidature of Mr. S K Sundararaman for appointment as an Independent Director of the Company.

Mr. L Ramkumar will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Act and being eligible, he offers himself for re-appointment.

The Board takes pleasure in recommending the appointment of Mr L Ramkumar as Director and Mr. S K Sundararaman as an Independent Director of the Company at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149(6) of the Act affirming that they meet the criteria of independence as stipulated under the Act.

Key Managerial Personnel

During the year, Mr. B Balamurugan was appointed as Chief Financial Officer of the Company.

Mr. Rajiv Narayanamoorty, Chief Executive Officer, Mr. B Balamurugan, Chief Financial Officer and Mr. C Subramaniam, Company Secretary are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

Internal Control System and their Adequacy

The Company has an Internal Control System, Commensurate with its size, scale and complexity of its operations. Audit Committee reviews internal audit reports and oversees the internal control system of the Company.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms a part of this report.

Corporate Social Responsibility (CSR)

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research etc. As a part of Corporate Social Responsibility program the Company has undertaken projects in the area of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure-A

Annual Return

The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as Annexure-C

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that :

i) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures therefrom;

ii) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations 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 31 March 2018 and of the profit of the Company for the year ended on that date;

iii) they 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;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended 31 March 2018; and

vi) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31 March 2018.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178 (3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178 (4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http://www.shanthigears.com/wp-content/uploads/2014/07/sgl-remuneration-policy.pdf.

Related Party Transactions

All related party transactions that were entered during the year under review were on an arm’s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company’s website, http://www.shanthigears.com/wp-content/ themes/shanthi/pdf/Policy-on-Related-Party-Transactions.pdf. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

Board Evaluation

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Vigil Mechanism/ Whistle Blower Policy

The details of vigil mechanism/Whistle Blower policy is given in the Corporate Governance Report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

The Company had 534 permanent employees on its rolls, as on 31 March 2018.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-B.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place an anti-sexual harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint about sexual harassment during the year 2017-18.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M R L Narasimha, Practicing Company Secretary to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-E. No qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

Auditors

The Members appointed M/s Deloitte Haskins & Sells, Chartered Accountants (Firm Registration No. 008072S) the Statutory Auditors of the Company for a period of 4 years from the conclusion of 41^st AGM (2014) till the conclusion of the ensuing Annual General Meeting.

It is proposed to re-appoint M/s Deloitte Haskins & Sells, Chartered Accountants, as the Statutory Auditors of the Company for a period of five years from the conclusion of the ensuing 45^th Annual General Meeting (2018) till the conclusion of the 50^th Annual General Meeting (2023).

M/s Deloitte Haskins & Sells, Chartered Accountants have confirmed that they are eligible under section 141 of the Companies Act, 2013 (‘theAct”) and the Rules thereunder for re-appointment as the Statutory Auditors and have further furnished their consent under the second proviso to Section 139 of the Act and also necessary confirmations. Further, they have also furnished a copy of the certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Board recommends the re-appointment of M/s Deloitte Haskins & Sells, Chartered Accountants as the Statutory Auditors for a five-year period and on terms of remuneration as set out in the resolution contained in the Notice of the ensuing Annual General Meeting.

Mr. B Venkateswar was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31 March 2019. A resolution seeking Members’ ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 2 May 2018. The Cost Audit report will be filed within the stipulated period.

The Directors thank all Customers, Vendors, Banks, State Government and Investors for their continued support to your Company’s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year.

On behalf of the Board

Coimbatore L Ramkumar

02 May 2018 Chairman

DIN-00090089

---

Mar 31, 2017

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March 2017

COMPANY PERFORMANCE

Rs.Crores

Particulars	Year Ended 31.03.2017	Year Ended 31.03.2016
Revenue from Operations (Net)	203.82	182.11
Earnings Before Interest, Tax, Depreciation & Amortization	46.33	39.86
Depreciation & Amortization Expense	17.83	16.71
Profit Before Tax	28.50	23.15
Less: Tax Expense	5.99	5.42
Profit After Tax	22.51	17.73
Add: Surplus brought forward	15.82	13.01
Appropriations:
Transfer to General Reserve	6.00	10.00
Interim Dividend paid	-	4.09
Tax on Interim Dividend	-	0.83
Balance Carried to Balance Sheet	32.33	15.82

Review of Operations

In 2016-17 your Company launched a program titled Connect 2016. The objective was to reach out to customers and end users across the country through structured programs to understand how the business could service them better. With special focus on revenue models the business deployed more resources to understand end user applications to provide comprehensive end to end solutions in gearing. R&D and Engineering teams unleased more custom built solutions targeting conventional markets such Steel, Cement and Power. A superior range of catalogue range of products was launched in the helical and worm series to target demanding needs of the market.

Operational Excellence remains a key priority for the business. Internally the plants worked on improving efficiencies and productivity. Our efforts to engage talent in Value add activities continues and the business has seen good progress. Capital investments during the year addressed enhancement of manufacturing capabilities and productivity.

Recruiting the right talent, engaging and developing them created an ambience of high performance culture within the business.

The revenue during the year was Rs.203.82 Crores against Rs.182.11 Crores in the previous year with growth of 12%. The Profit before tax for the current year amounts to Rs.28.50 Crores as against Rs.23.15 Crores in the previous year.

Management Discussion and Analysis

The Management Discussion and Analysis, which forms part of this report, sets out an analysis of the business, the industrial scenario and the performance of the Company.

Dividend

The Board of Directors has recommended a dividend of Rs.0.75/-(Paise Seventy Five only) per equity share of Face Value Rs.1/- each for the financial year 2016-17. Dividend, if approved by the shareholders, will be paid on or after 31 July 2017.

Directors

Mr. V Venkiteswaran, Non-Executive Independent Director will retire at the ensuing Annual General Meeting under Section 149 of the Companies Act, 2013 (“the Act”). The Board places on record its appreciation of the service rendered by Mr. V Venkiteswaran during his tenure as Director of the Company.

Mr. C R Swaminathan was appointed as an Independent Director. He holds office up to the date of the ensuing Annual General Meeting. The Board recommends his re-appointment as an Independent Director under Section 149 of the Act for a term of one year viz., from the date of 44^th Annual General Meeting (2017) till the date of the 45^th Annual General Meeting (2018).

Notice along with the deposit in terms of Section 160 of the Act has been received from a Member proposing the candidature of Mr. C R Swaminathan for appointment as an Independent Director of the Company.

Mr. L Ramkumar will retire by rotation at the ensuing Annual General Meeting under Section 152 of the Act and being eligible, he offers himself for re-appointment.

The Board takes pleasure in recommending the appointment Mr. L Ramkumar as Director and Mr. C R Swaminathan as an Independent Director of the Company at the forthcoming Annual General Meeting.

All the Independent Directors of the Company have furnished necessary declaration in terms of Section 149 (6) of the Act affirming that they meet the criteria of independence as stipulated under the Act.

Key Managerial Personnel

Mr. Rajiv Narayanamoorty, Chief Executive Officer and Mr. C Subramaniam, Company Secretary are the Key Managerial Personnel (KMP) of the Company as per Section 203 of the Companies Act, 2013.

Mr. Saurabh Jain, Chief Financial Officer of the Company resigned from the services of the Company for personal reasons and was relieved on 14 March 2017.

Internal Control System and their Adequacy

The Company has an Internal Control System, Commensurate with its size, scale and complexity of its operations. Audit Committee reviews internal audit reports and oversees the internal control system of the Company.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms a part of this report.

Corporate Social Responsibility (CSR)

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research etc. As a part of Corporate Social Responsibility program the Company has undertaken projects in the area of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure-A

Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure C

Directors Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and belief confirm that:

i) in the preparation of the annual accounts, applicable Accounting Standards have been followed and that there were no material departures there from;

ii) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations 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 31 March 2017 and of the profit of the Company for the year ended on that date;

iii) they 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;

iv) they have prepared the annual accounts on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year ended 31 March 2017; and

vi) proper system has been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31 March 2017.

Policy on Appointment and Remuneration of Directors

Pursuant to Section 178(3) of the Companies Act, 2013 the Nomination and Remuneration Committee of the Board of the Company has formulated the criteria for Board nominations as well as policy on remuneration for Directors and employees of the Company.

The Remuneration policy provides the framework for remunerating the members of the Board, Key Managerial Personnel and other employees of the Company. This policy is guided by the principles and objectives enumerated in Section 178(4) of the Companies Act, 2013 and reflects the remuneration philosophy and principles of the Murugappa Group to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long term performance of the Company. The policy lays down broad guidelines for payment of remuneration to Executive and Non-Executive Directors within the limits approved by the shareholders.

The Board Nomination criteria and the Remuneration policy are available on the website of the Company at http://www.shanthigears. com/wp-content/uploads/2014/07/sgl-remuneration-policy.pdf.

Related Party Transactions

All related party transactions that were entered during the year under review were on an arm’s length basis and were in ordinary course of business. There are no materially significant related party transactions during the year which may have a potential conflict with the interest of the Company at large. Necessary disclosures as required under Accounting Standard (Ind AS 24) have been made in the notes to the Financial Statements. The Policy on Related Party Transactions, as approved by the Board, is uploaded and is available on the Company’s website, http://www.shanthigears.co m/wp-content/ themes/shanthi/pdf/Policy-on-Related-Party-Transactions.pdf. None of the Directors had any pecuniary relationships or transactions vis-a-vis the Company.

Board Evaluation

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Vigil Mechanism/ Whistle Blower Policy

The details of vigil mechanism/Whistle Blower policy is given in the Corporate Governance Report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. Industrial Relations continued to be cordial.

The Company had 547 permanent employees on its rolls, as on 31 March 2017.

The disclosure with respect to remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached and forms part of this Report as Annexure-B.

The information relating to employees and other particulars required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members excluding the information on employees, particulars of which are available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the forthcoming Annual General Meeting. If any Member is interested in obtaining a copy thereof, such member may write to the Company Secretary in the said regard.

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

Conservation of energy, technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure-D.

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

The Company has in place an anti-sexual harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint about sexual harassment during the year 2016-17.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M R L Narasimha, Practicing Company Secretary to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith and forms part of this Report as Annexure-E. No qualification or observation or other remarks have been made by the Secretarial Auditor in his Report.

Auditors

The Members appointed M/s. Deloitte Haskins & Sells, the Statutory Auditors of the Company for a period of 4 years from the conclusion of 41^st AGM (2014) till the conclusion of 45^th AGM (2018). A resolution seeking ratification of the appointment of Statutory Auditors and remuneration payable to them for the financial year 2017-18 is included in the aGm Notice dated 03 May 2017.

Mr. B. Venkateswar was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31 March 2018. A resolution seeking Members’ ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 03 May 2017. The Cost Audit report will be filed within the stipulated period.

The Directors thank all Customers, Vendors, Banks, State Government and Investors for their continued support to your Company’s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year.

On behalf of the Board

Coimbatore M M Murugappan

03 May 2017 Chairman

---

Mar 31, 2015

DIRECTORS' REPORT TO THE SHAREHOLDERS

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31st March, 2015

FINANCIAL RESULTS (Rs. Crores)

YEAR ENDED YEAR ENDED PARTICULARS 31.03.2015 31.03.2014

Revenue from Operations (Gross) 165.03 166.69

Less: Excise Duty 13.03 15.92

Revenue from Operations (Net) 152.00 150.77

Earnings Before Interest, Tax, Depreciation & Amortisation 29.89 51.56

Finance Cost 0.03 0.02

Depreciation & Amortisation Expense 16.75 25.61

Profit Before Tax 13.11 25.93

Less: Tax Expense 3.79 7.55

Profit After Tax 9.32 18.38

Add: Surplus brought forward 13.92 15.10

23.24 33.48 Appropriations :

Transfer to General Reserve 5.00 10.00

Depreciation on transition to Schedule II of the Companies Act, 2013 (0.07) -

Interim / Final Dividend paid 4.09 8.17

Tax on Interim / Final Dividend 0.82 1.39

Balance carried to Balance Sheet 13.26 13.92

Review of Operations

The year 2014-15 was a year of building the base for the Company. It was a year in which a firm foundation was laid with a view to positioning the Company for the future.

The key initiatives undertaken by the Company were building references (track record of supplies) and experience in large sized gearboxes to several key customers, making a breakthrough in the high growth segments such as Defence, consolidating our strong position in the Railways and Metro segments, building capability in the designing of high-value added critical gearboxes for complex applications, establishing a strong Service network and capability in Gearbox Condition Monitoring (GCMC), establishing strategic alliances and building a strong team and future leadership pipeline capable of handling the upcoming challenges. These initiatives helped re-establish the Shanthi brand in the market place and position it as a reliable, dependable and quality brand. The Company also undertook many measures aimed at improving its execution and servicing its customers better. This process is expected to be taken forward further in this year paving the way for a stable execution environment. The transformation to a customer-centric organization has begun.

The revenue during the year was at Rs.152.00 crores against Rs.150.77 crores in the previous year. The Company grew its order book significantly during the year and registered a growth of 20%. This growth in orders booked came largely from the initiatives mentioned above as well as the measures taken last year to expand our presence in the market, build the service network and enter into new segments and industries hitherto not addressed. While we were able to grow the order book we could not execute some of the large value orders due to delays in the project implementation by customers, internal issues with respect to ramping up execution and technical challenges constraining our growth. The benefits of these initiatives, being long term in nature, are expected to accrue to the Company during the current year and in the years to come. The Profit before Tax for the current year amounts to Rs.13.11 crores as compared to Rs.25.93 crores last year. The profit for the year was affected due to the one time impact of providing for certain doubtful debts, (Rs.3.03 crores) strategic need for some products at a lower margin and making an entry in certain segments.

Management Discussion and Analysis

The Management Discussion and Analysis, which forms part of this report, sets out an analysis of the business, the industrial scenario and the performance of the Company.

Dividend

The Company declared an interim dividend of Rs.0.50/- per equity share of Face Value Rs.1/- in February, 2015.(PY Rs.1/- per share). The same has been treated as final dividend.

Directors

During the year the Company appointed Ms. Soundara Kumar as an Additional Director of the Company under Section 149 of the Companies Act, 2013 with effect from 31st March, 2015. She holds office up to the date of the ensuing AGM. Ms. Soundara Kumar has worked extensively in State Bank of India and has held several important positions including being the CEO of SBI in California and Managing Director of State Bank of Indore. Her knowledge and experience will be of benefit to the Company. The Board recommends her appointment as Independent Director under section 149 of the Companies Act, 2013 for a term of five years viz. from the date of the 42nd AGM (2015) till the date of 47th AGM (2020).

Mr. L Ramkumar is liable to retire by rotation and being eligible, offers himself for re-appointment.

Dr. Sreeram Srinivasan, President & Executive Director, resigned from the Board of Directors as he wishes to pursue other interests. Dr. Sreeram Srinivasan guided the Company since it was acquired by Tube Investments of India Ltd and led it through the transition years under the new Management. The foundation he laid in terms of customer goodwill and building a strong leadership team along with the various processes and systems put in place will help the Company in the years to come. The Board wishes to place on record its appreciation of the good work done by Dr. Sreeram Srinivasan during his tenure with the Company.

All Independent Directors have given a declaration that they meet the criteria of independence as laid down under section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Composition of Audit Committee and its terms of references are given in Report on Corporate Governance. Board has accepted all recommendations of Audit Committee.

Key Managerial Personnel

Mr. Krishna Ramnath, was appointed as Chief Financial Officer with effect from 29th April, 2014. The remuneration and other particulars of Mr. Krishna Ramnath is included in extract of Annual Report in Form MGT 9 annexed as Annexure B.

Internal Control System and their Adequacy

The Company has an Internal Control System, Commensurate with its size, scale and complexity of its operations. Audit Committee reviews internal audit reports and oversees the internal control system of the Company.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms a part of this report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans and to build a strong leadership pipeline for the present and several years into the future. The Company designed specific programs for building skills of its current employees, Graduate Engineer Trainees and Management Trainees. A Grow from Within program was also introduced to facilitate the growth of new entrants. Industrial Relations continued to be cordial and the first wage settlement with the Union was concluded amicably. Several unique features have been introduced to enhance and drive shop-floor productivity as a part of the settlement.

The Company had 562 permanent employees on its rolls, as on 31st March, 2015.

Corporate Social Responsibility Initiative

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research etc. As a part of Corporate Social Responsibility program the company has undertaken projects in the area of Education, Scientific Research, etc., List of CSR Activities, Composition of CSR Committee and CSR Policy is annexed herewith as Annexure A.

Extract of Annual Report

The Details forming part of the extract of the Annual Report form MGT 9 is annexed herewith as Annexure B.

Meetings

A Calendar of Meetings is prepared and circulated in advance to the Directors. During the Financial Year 2014-15 Six Board Meetings and Four Audit Committee Meetings were held. The details of which are given in the Corporate Governance Report.

Directors Responsibility Statement

Directors Responsibility Statement is annexed herewith as Annexure C.

Remuneration Policy

The Board has on recommendation of Nomination & Remuneration Committee formed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is annexed herewith as Annexure D.

Related Party Transactions

All related party transactions that were entered during the year under review were on an arm's length basis and were in ordinary course of business. All related party transactions are placed before the Audit Committee for approval. The Policy on Related Party Transactions, as approved by the Board, is uploaded on the company's website. Weblink:http://www.shanthigears.com/wp-content/themes/shanthi/pdf/ Policy-on-Related-Party-Transactions.pdf.

Board Evaluation

The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Vigil Mechanism/ Whistle Blower Policy

The details of vigil mechanism/Whistle Blower policy is given in the Corporate Governance Report.

Particulars of Employees

The information required pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to Members and others entitled thereto excluding the information on employees particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. There are no employees drawing salaries in excess of the limit prescribed under Section 197 (12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014.

Conservation of energy, Technology absorption and foreign exchange earnings and outgo

Conservation of energy, Technology absorption and foreign exchange earnings and outgo is annexed herewith as Annexure E.

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

The Company has in place an anti sexual harassment policy in line with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Compliance Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary and trainees) are covered under this policy. The company has not received any compliant about sexual harassment during the year 2014-15.

Auditors

The Members appointed M/s Deloitte Haskins & Sells, the Statutory Auditors of the Company for a period of 4 years from the conclusion of 41st AGM (2014) till the conclusion of 45th AGM (2018). A resolution seeking ratification of the appointment of Statutory Auditors and remuneration payable to them for the financial year 2015-16 is included in the AGM Notice dated 29th April, 2015.

Mr. B Venkateswar, was appointed as Cost Auditor for audit of the Cost Accounting records of the Company for the year ended 31st March, 2016. A resolution seeking Members' ratification of the Remuneration payable to Cost Auditor is included in the AGM notice dated 29th April, 2015. The Cost Audit report will be filed within the stipulated period.

Mr. M.R.L Narasimha, Practicing Company Secretary was appointed to undertake the Secretarial Audit of the Company. The Report of Secretarial Audit is annexed herewith as Annexure F.

The Directors thank all Customers, Vendors, Banks, State Government and Investors for their continued support to your Company's performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year.

Directors' Responsibility Statement

(Pursuant to Section 134 (3) (c) of the Companies Act, 2013)

Pursuant to Section 134 (3) (c) of the Companies Act, 2013, the Directors to the best of their knowledge and belief confirm that:

- in the preparation of the Statement of Profit for the financial year ended 31st March, 2015 and the Balance Sheet as at that date ("financial statements"), applicable Accounting Standards have been followed.

- appropriate accounting policies have been selected and applied consistently and such judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period.

- 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. To ensure this, the Company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system of internal controls its inherent limitations should be recognised. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The Audit Committee meets at regular intervals to review the internal audit function.

- the financial statements have been prepared on a going concern basis.

- that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

- the systems to ensure compliances with the provisions of all applicable laws were in place and were adequate and operating effectively.

- the financial statements have been audited by Messrs. Deloitte Haskins & Sells, Statutory Auditors and their report is appended thereto.

On behalf of the Board

Coimbatore M M Murugappan

29th April, 2015 Chairman

---

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31st March, 2014

FINANCIAL RESULTS (Rs. In crores)

YEAR ENDED YEAR ENDED PARTICULARS 31.03.2014 31.03.2013

Revenue from Operations (Gross) 166.69 159.01

Less: Excise Duty 15.91 15.29

Revenue from Operations (Net) 150.78 143.72

Earnings Before Interest, Tax, Depreciation & Amortisation 51.56 50.92

Finance Cost 0.02 0.29

Depreciation & Amortisation Expense 25.61 28.56

Profit Before Tax 25.93 22.07

Less: Tax Expense 7.55 6.60

Profit After Tax 18.38 15.47

Add: Surplus brought forward 15.10 10.36

33.48 25.83

Appropriations :

Transfer to General Reserve 10.00 5.00

Interim / Final Dividend paid 8.17 4.90

Tax on Interim / Final Dividend 1.39 0.83

Balance carried to Balance Sheet 13.92 15.10

Review of Operations

The year 2013-14 was a satisfactory year for the Company. The year marked the first full year of operation as a Murugappa Group Company. While the country witnessed a good monsoon in some parts, economic activity remained subdued and the Capital Goods sector in particular fared poorly.

During the year under review, the Company recorded a revenue of Rs. 151 crores as against Rs. 144 crores in the previous year, a growth of 5%. During the year, the Company focused on enhancing its customer base; improving efficiency in operations; building the skill base and on-boarding key talents. On the customer front the Company continued to direct its efforts towards winning back customers as well as breaking into new accounts. Expanding reach to customers and ensuring prompt and appropriate service was also a key thrust area. These measures have begun to yield results and the full benefit of these initiatives is expected to accrue in the coming years. The Company has also streamlined many processes by leveraging IT as a part of its Operational Excellence journey resulting in improved deliveries to customers.

The year 2013-14 was challenging in many respects. The key user segments of the Company''s products such as cement, mining, construction & infrastructure either declined or remained at the same level as in the previous year. The policy uncertainty combined with high interest rates prevailing in the country acted as a deterrent to investments and new projects. The resulting shrinkage in the gears and gear box market led to intense competition and pricing pressures. Added to the above, poor power availability and increase in input costs exerted pressure on margins. Despite these challenges, the Company was able to maintain its trend of booking orders and continued to have a healthy order book position. Focus on key customers and segments, improvement in servicing and enhanced presence in the market helped the Company grow its top line by 6%. The Company embarked on various cost management initiatives aimed at protecting its margins in a difficult market. The Profit before Tax was at Rs. 25.93 crores against Rs. 22.07 crores in the previous year.

Management Discussion and Analysis

The Management Discussion and Analysis, which forms part of the Annual Report, sets out an analysis of the business, the industrial scenario and the performance.

Dividend

The Company declared an interim dividend of Rs. 1/- per equity share of Face Value Rs. 1/- in January, 2014. The same has been treated as final dividend.

Directors

Consequent to the introduction of the Companies Act, 2013 the Independent Directors of the Company have to be appointed for a period of 5 years in accordance with Section 149 of the said Act. The Company has a policy governing the retirement of Non-Executive/ Independent Directors. In line with this, Independent Directors retire at the age of 70 years. Accordingly, Independent Directors seek re-appointment as follows :

Sl.No. Name of Independent Director Period of Appointment

1 Mr. C R Swaminathan Three consecutive years from the conclusion of this Annual General Meeting.

2 Mr. J Balamurugan Five consecutive years from the conclusion of this Annual General Meeting.

3 Mr. V Venkiteswaran Two consecutive years from the conclusion of this Annual General Meeting.

Mr. M M Murugappan is liable to retire by rotation and being eligible offers himself for re-appointment.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms a part of this report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of its ambitious growth plans. With a view to building capabilities, professionals with talent and of high caliber have been on boarded at various levels in the organisation. The operating teams have also been strengthened with infusion of fresh engineers and experienced people both from within the industry and elsewhere. The current focus for the Company is to enhance and strengthen its Sales and Distribution network.

The Company had 562 permanent employees on its rolls, as on 31st March, 2014.

Social Commitment

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company contributed a portion of its profit for the promotion of worthy causes like education, healthcare, scientific research, etc.

Auditors

M/s. Deloitte Haskins & Sells, the Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting. M/s. Deloitte Haskins & Sells are seeking re-appointment and have confirmed that their appointment, if approved, will be in compliance with Section 141 of the Companies Act, 2013. In accordance with Section 139 of the Companies Act, 2013 the auditors of the Company are to be appointed for a period of five years. In line with this requirement the appointment of M/s. Deloitte Haskins & Sells will be for a period of 4 years commencing from the conclusion of the ensuing Annual General Meeting, making in all five years together with the current year.

Mr. B Venkateswar, has been appointed as Cost Auditor for audit of the Cost Accounting records for Engineering Products for the year ended 31st March, 2014. The Cost Audit report relating to the above products will be filed within the stipulated period of 180 days from the close of the financial year.

The other information required to be furnished in the Directors'' Report under the provisions of Section 217 of the Companies Act, 1956 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, particulars of employees and Directors'' Responsibility Statement are annexed and form a part of this Report.

The Directors thank all Customers, Vendors, Banks, State Government and Investors for their continued support to your Company''s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering the good performance during the year.

On behalf of the Board

Coimbatore M M Murugappan

29th April, 2014 Chairman

---

Mar 31, 2013

The Directors have pleasure in presenting to you the performance of the Company, for the year ended 31 March, 2013

FINANCIAL RESULTS

(Rs. Crores)

PARTICULARS YEAR ENDED YEAR ENDED 31.03.2013 31.03.2012

Revenue from Operations (Gross) 160.94 186.67

Less : Excise Duty 15.29 14.35

Revenue from Operations (Net) 145.65 172.32

Earnings Before Interest, Tax, Depreciation & Amortisation 50.93 69.32

Finance Cost 0.29 0.62

Depreciation & Amortisation Expense 28.57 27.10

Profit Before Tax 22.07 41.60

Less : Tax Expense 6.60 13.47

Profit After Tax 15.47 28.13

Add: Surplus brought forward 10.36 9.23

25.83 37.36

Appropriations :

Transfer to General Reserve 5.00 17.50

Proposed Dividend 4.90 8.17

Tax on Dividend 0.83 1.33

Balance carried to Balance Sheet 15.10 10.36

The year 2012-13 has been a landmark year for the Company. During this year the founder promoter of the Company Mr. P Subramanian decided to retire from active Corporate Responsibilities and focus on his other personal interests in the social sphere. Tube Investments of India Ltd (TII) acquired his entire stake and followed it up with an Open Offer in line with the regulations and acquired another 26% from the general public. Effective 19th November, 2012 Shanthi Gears Ltd (SGL) became a subsidiary of TII. The Board wishes to place on record its appreciation of the passionate and pioneering efforts by Mr. P Subramanian which helped build SGL into the company as it now exists. The Board also wishes to place on record its appreciation of the services rendered by the other members of the erstwhile Board of Directors of SGL for their valuable contribution to the growth and success of SGL.

Review of Operations

During the year under review, the Company achieved a turnover of Rs. 146 crores as against Rs. 172 crores in the previous year, a decline of 15%. The year 2012-13 was challenging in many respects. The economic growth levels witnessed by the country in the previous years declined and the business sentiment remained largely negative. Poor monsoons, high interest rates, low growth, slowdown in infrastructure projects and overall drop in consumer confidence impacted the economy as a whole and consequently the sales of the Company as well. The Profit Before Tax was at Rs. 22.07 cr. against Rs. 41.60 cr. in the previous year. The decline in profit was due to the lower turnover, impact of input cost increases and higher fixed costs. The Company is focusing on enhancing customer base, improving its operational efficiencies and cost management to mitigate the effect of these factors. The benefit of these initiatives is expected to accrue in the current year.

Management Discussion and Analysis

The Management Discussion and Analysis, which forms part of the Annual Report, sets out an analysis of the business, the industrial scenario and the performance.

Dividend

Your Directors recommend a Dividend of Rs. 0.60 per Equity Share of Rs. 1 each fully paid up.

Directors

Consequent to the acquisition of the Company by TII, the Board inducted the following Directors as additional Directors with effect from 3rd September, 2012

Mr. M M Murugappan Mr. L Ramkumar Mr. C R Swaminathan Mr. J Balamurugan Dr. Sreeram Srinivasan

Mr. V Venkiteswaran was inducted as an additional Director with effect from 30th January, 2013.

All the above Directors are seeking appointment at the ensuing Annual General Meeting.

Effective 3rd September, 2012 Mr. P Subramanian, Mr. M J Vijayaraaghavan, Dr. D Padmanaban, Mr. C G Kumar and Mr. M Alagiriswamy resigned from their position as Director. The Board wishes to thank them for their guidance & contribution.

Corporate Governance

Your Company is committed to maintaining high standards of Corporate Governance. A report on Corporate Governance, along with a certificate from the Statutory Auditors on compliance with Corporate Governance norms forms a part of this report.

Human Resources

The HR strategy and initiatives of your Company are designed to effectively partner the business in the achievement of it ambitious growth plans. During the few months since the take-over thrust has been on creating a more effective organization, induction of new talent and building capabilities across the organization.

The Company had 581 permanent employees on its rolls, as on 31st March , 2013.

Social Commitment

As a corporate citizen, your Company is committed to the conduct of its business in a socially responsible manner. The Company made a small contribution from its profit for the promotion of worthy causes like education, healthcare, scientific research etc.

Auditors

M/s. S Lakshminarayanan Associates, the Statutory Auditors of the Company retire at the conclusion of the ensuing Annual General Meeting. M/s. S Lakshminarayan Associates has expressed a desire not to seek re-appointment at this meeting. The Board wishes to place on record its appreciation of the services rendered by M/s. S Lakshminarayanan Associates as Statutory Auditors of the Company since its inception.

Mr. B Venkateswar, has been appointed as the Cost Auditor for audit of the Cost Accounting records for Engineering products for the financial year ended 31st March, 2013. The Cost Audit report relating to the above product will be filed within the stipulated period of 180 days from the close of the financial year.

The other information required to be furnished in the Directors'' Report under the provisions of Section 217 of the Companies Act, 1956 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, particulars of employees and Directors'' Responsibility Statement are annexed and form a part of this Report.

The Directors thank all Customers, Vendors, Banks, Central & State Governments and Investors for their continued support to your Company''s performance and growth. The Directors also wish to place on record their appreciation of the contribution made by all the employees of the Company in delivering a good performance during the year.

On behalf of the Board Chennai M M Murugappan

30th April, 2013 Chairman

---

Mar 31, 2012

The Directors have pleasure in presenting to you the Thirty Nineth Annual Report, together with the audited accounts of your Company, for the year ended 31st March, 2012.

FINANCIAL RESULTS Year Ended Year Ended 31-03-2012 31-03-2011 Rs. in Million

Gross Profit before Interest & Depreciation 693.481 716.672

Less : Finance Cost 6.197 10.309

Depreciation 270.994 268.461

Donations 0.336 0.292

Provision for Taxation / Withholding Tax Paid 170.160 180.162

Deferred Tax (35.266) (32.363)

Income Tax / FBT paid for earlier years (0.214) 11.196

281.274 278.615

Add : Surplus brought forward 92.290 83.646

373.564 362.261

Appropriations:

Proposed Dividend 81.716 81.716

Tax on Dividend 13.256 13.256

General Reserve 175.000 175.000

Surplus in Profit & Loss Account 103.592 92.289

373.564 362.261

DIVIDEND

Your Directors recommend a Dividend of Re.1 per Equity Share of Re.1 each fully paid up (100% on the paid up share capital of the Company)

OPERATING RESULTS

The Company has achieved a Turnover of Rs. 1730.053 Million for the year under review as against the turnover of Rs. 1623.481 Million of the previous year showing a growth of 6.56%. The other financial parameters have also improved in line with the sales growth. Barring unforeseen circumstances your Directors hope to achieve satisfactory results for the current year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is making continuous efforts to conserve and optimise energy wherever practicable by economising on fuel and power. For the Company's existing product line, there is no technical collaboration/arrangement. Your Company has made export sales of Rs. 200.759 Million during the year. The outflow of foreign exchange on Import of Machinery, Raw Materials, Consumable Stores & Tools, Machinery and Electrical Spares, Interest on ECBs, Advertisement, Subscription, Taxes & Licenses, Training and Technical Consultancy Charges amounted Rs. 34.826 Million.

FIXED DEPOSITS

The Company has not accepted any deposits from the public during the year.

DIRECTORS

The following Directors are due to retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-election

Sri M.J.Vijayaraaghavan

Sri C.G.Kumar

DIRECTORS' RESPONSIBILITY STATEMENT

In compliance to the Provisions of Section 217 (2AA) of the Companies Act, 1956 your Directors wish to place on record-

(i) that in preparing the Annual Accounts, all applicable Accounting Standards have been followed;

(ii) that the accounting policies adopted are consistently followed and the judgments and estimates made 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 and Loss Account of the Company for the Financial year;

(iii) that the Directors have taken proper and sufficient care 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/detecting fraud and other irregularities;

(iv) that the Directors have prepared the Annual Accounts on going concern basis.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreements with the Stock Exchanges, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditors' Certificate regarding Compliance of conditions of Corporate Governance.

AUDITOR

Your Company's auditors M/s. S. Lakshminarayanan Associates are due to retire at the ensuing Annual General Meeting and are eligible for re-appointment.

PERSONNEL

In accordance with the requirements of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, particulars of employees are given in the annexure to this report.

APPRECIATION

The relationship between Management and Staff & Workers is very cordial and your Directors wish to place on record their sincere appreciation for the devoted and efficient services rendered by all employees of the Company. Your Directors thankfully acknowledge the continued co-operation and support rendered by Banks and Financial Institutions. The Board conveys its thanks to the Central and State Governments. It also thanks its customers and suppliers for their support and investors for reposing faith in the Company.

For the Board of Directors

Coimbatore P. Subramanian

25th May, 2012 Chairman & Managing Director

---

Mar 31, 2011

The Directors have pleasure in presenting to you the Thirty Eighth Annual Report, together with the audited accounts of your Company, for the year ended 31st March, 2011.

FINANCIAL RESULTS Year Ended Year Ended 31-03-2011 31-03-2010

Rs. in Million

Gross Profit before Interest & Depreciation 715.122 551.083

Less: Interest 8.759 38.132

Depreciation 268.461 269.266

Donations 0.292 0.423

Provision for Taxation / Withholding Tax Paid 180.162 110.275

Deferred Tax (32.363) (25.934)

Income Tax / FBT paid for earlier years 11.196 (2.927)

278.615 161.848

Add : Surplus brought forward 83.646 98.028

362.261 259.876

Appropriations:

Proposed Dividend 81.716 65.373

Tax on Dividend 13.256 10.857

General Reserve 175.000 100.000

Surplus in Profit & Loss Account 92.289 83.646

362.261 259.876



DIVIDEND

Your Directors recommend a Dividend of Re.1 per Equity Share of Re.1 each fully paid up (100% on the paid up share capital of the Company)

OPERATING RESULTS

The Company has achieved a Turnover of Rs. 1603.602 Million for the year under review as against the turnover of Rs. 1213.871 Million of the previous year showing a growth of 32.11%. The other financial parameters have also improved in line with the sales growth. Barring unforeseen circumstances your Directors hope to achieve satisfactory results for the current year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is making continuous efforts to conserve and optimise energy wherever practicable by economising on fuel and power. For the Companys existing product line, there is no technical collaboration/arrangement. Your Company has made export sales of Rs. 105.165 Million during the year. The outflow of foreign exchange on Import of Machinery, Raw Materials, Consumable Stores & Tools, Machinery and Electrical Spares, Interest on ECBs, Advertisement, Subscription and Germany Liaison Office Expenses amounted Rs. 125.115 Million.

FIXED DEPOSITS

The Company has not accepted any deposits from the public during the year.

DIRECTORS

Ms. S.Sangeetha resigned from the Board with effect from 30th June, 2010 due to pre-occupation. The Directors place on record the valuable guidance and support rendered by Ms.S.Sangeetha during her tenure of office as Wholetime Director.

Dr. D.Padmanaban retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-election.

Sri. M.Alagiriswamy who was appointed as Director in the place of casual vacancy caused by resignation of Ms.S.Sangeetha, retires at the ensuing Annual General Meeting. A member has given a notice in writing proposing Sri.M.Alagiriswamy for the office of Director along with required deposit amount.

DIRECTORS RESPONSIBILITY STATEMENT

In compliance to the Provisions of Section 217 (2AA) of the Companies Act, 1956 your Directors wish to place on record-

(i) that in preparing the Annual Accounts, all applicable Accounting Standards have been followed;

(ii) that the accounting policies adopted are consistently followed and the judgments and estimates made 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 and Loss Account of the Company for the Financial year;

(iii) that the Directors have taken proper and sufficient care 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/detecting fraud and other irregularities;

(iv) that the Directors have prepared the Annual Accounts on going concern basis.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreements with the Stock Exchanges, your Directors are pleased to annex the following:

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditors Certificate regarding Compliance of conditions of Corporate Governance.

AUDITOR

Your Companys auditors M/s. S. Lakshminarayanan Associates are due to retire at the ensuing Annual General Meeting and are eligible for re-appointment.

PERSONNEL

In accordance with the requirements of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, particulars of employees are given in the annexure to this report.

APPRECIATION

The relationship between Management and Staff & Workers is very cordial and your Directors wish to place on record their sincere appreciation for the devoted and efficient services rendered by all employees of the Company. Your Directors thankfully acknowledge the continued co-operation and support rendered by Banks and Financial Institutions. The Board conveys its thanks to the Central and State Governments. It also thanks its customers and suppliers for their support and investors for reposing faith in the Company.

For the Board of Directors

P. Subramanian

Chairman & Managing Director

Coimbatore 13th May, 2011

---

Mar 31, 2010

The Directors have pleasure in presenting to you the Thirty Seventh Annual Report, together with the audited accounts of your Company, for the year ended 31 st March, 2010.

FINANCIAL RESULTS Year Ended Year Ended 31-03-2010 31-03-2009

Rs. in Million

Gross Profit before Interest & Depreciation 531.784 1032.573

Less: Interest 18.833 86.247

Depreciation 269.266 257.723

Donations 0.423 0.533

Provision for Taxation / Withholding Tax Paid 110.275 231.196

Fringe Benefit Tax - 2.500

Deferred Tax (25.934) 10.261

Prior Year Tax - 3.618

158.921 440.495

Add: Excess Provision no longer required 2.927 0.115

Surplus brought forward 98.028 72.142

259.876 512.752 Appropriations:

Proposed Dividend 65.373 98.059

Tax on Dividend 10.857 16.665

General Reserve 100.000 300.000

Surplus in Profit & Loss Account 83.646 98.028

259.876 512.752

DIVIDEND

Your Directors recommend a Dividend of Rs. 0.80 per Equity Share of Re. 1 each fully paid up (80% on the paid up share capital of the Company)

OPERATING RESULTS

The Company has achieved a Turnover of Rs. 1213.871 Million for the year under review as against the turnover of Rs. 2524.842 Million of the previous year. Various factors such as change in management team, labour unrest, the measures taken by the Company to revamp, restructure and relocating of machines, scaling down of plant operations has resulted in decrease in turnover. The Companys policy of manufacturing niche and value added products have helped the Company to maintain profitability irrespective of reduction in sales. The Company proposes to follow the same policy during the current year,

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The Company is making continuous efforts to conserve and optimise energy wherever practicable by economising on fuel and power. For the Companys existing product line, there is no technical collaboration/arrangement. Your Company has made export sales of Rs. 93.579 Million during the year. The outflow of foreign exchange on Import of Machinery, Raw Materials, Consumoble Stores 8c Tools, Machinery and Electrical Spares, Interest on ECBs, Advertisement, Subscription and Germany Liaison Office Expenses amounted Rs. 47.71 Million.

FIXED DEPOSITS

The Company has not accepted any deposits from the public during the year.

DIRECTORS

Sri P.N. Gopal resigned from the Board on 25th January, 2010 due to health condition. He was associated with the Company from 17.03.1986. The Directors place on record the valuable guidance and support rendered by Sri. P.N.Gopal during his tenure of office as Director.

Sri.M.J. Vijayaraaghavan retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-election.

Sri. C.G.Kumar was appointed as additional Director on 25th January, 2010, retires at the ensuing Annual General Meeting, A member has given a notice in writing proposing Sri, C.G.Kumar for the office of Director along with required deposit amount.

DIRECTORS RESPONSIBILITY STATEMENT

In compliance to the Provisions of Section 217 (2AA) of the Companies Act, 1956 your Directors wish to place on record

(i) that in preparing the Annual Accounts, all applicable accounting standards have been followed;

(ii) that the accounting policies adopted are consistently followed and the judgments and estimates made 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 and Loss Account of the Company for the Financial year;

(iii) that the Directors have taken proper and sufficient care 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/detecting fraud and other irregularities;

(iv) that the Directors have prepared the Annual Accounts on going concern basis.

CORPORATE GOVERNANCE

Pursuant to the requirements of Listing Agreements with the Stock Exchanges, your Directors are pleased I to annex the following: ,

1. Management Discussion and Analysis Report

2. A Report on Corporate Governance

3. Auditors Certificate regarding Compliance of conditions of Corporate Governance.

AUDITOR

Your Companys auditors M/s. S. Lakshminarayanan Associates are due to retire at the ensuing Annual General Meeting and are eligible for re-appointment.

PERSONNEL

In accordance with the requirements of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, particulars of employees are given in the annexure to this report.

APPRECIATION

The relationship between Management and Staff & Workers is very cordial and your Directors wish to place on record their sincere appreciation for the devoted and efficient services rendered by all employees of the Company. Your Directors thankfully acknowledge the continued co-operation and support rendered by Banks and Financial Institutions, The Board conveys its thanks to the Central and State Governments. It also thanks its customers and suppliers for their support and investors for reposing faith in the Company.

For the Board of Directors Coimbatore P. Subramanian

24th May, 2010 Chairman & Managing Director