Directors Report of Varroc Engineering Ltd.

Mar 31, 2025

The Directors of your Company take pleasure in presenting the 37^th Annual Report on the business and operations of Varroc Engineering Ltd. ("the Company") together with the summary of standalone and consolidated financial statements for the year ended March 31, 2025.

The Audited Financial Statements of your Company as on March 31, 2025, are prepared in accordance with the relevant applicable Indian Accounting Standards ("Ind AS") and Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and the provisions of the Companies Act, 2013 ("Act"). The summarised financial highlight is depicted below:

OVERVIEW OF FINANCIAL PERFORMANCE

Key highlights of consolidated and standalone financial performance for the year ended March 31, 2025 and March 31,

2024 are summarised as under: (H i_n Million)
Particulars	STANDALONE		CONSOLIDATED
Particulars	Financial Year 2024-25	Financial Year 2023-24 Re-stated	Financial Year 2024-25	Financial Year 2023-24

Continuing Operations
Revenue from operations	73,685.82	66,760.16	81,540.84	75,519.37
Other Income	276.24	288.69	176.82	275.76
Earnings before Finance Cost, tax, depreciation and amortisation expenses	7,946.50	7,267.13	8,064.37	8,011.38
Less: Finance cost	1,622.26	1,843.05	1,702.29	1,938.56
Less: Depreciation and amortization expenses	2,517.36	2,664.39	3,233.21	3,368.18
Add/(Loss): Share of Net Profit/(Loss) of Investment accounted for using the equity Method	-	-	37.09	443.96
Less: Exceptional item	208.12	45.00	1,473.37	-
Profit/(loss) before tax from continuing operations	3,598.76	2,714.69	1,692.59	3,148.60
Less: Current tax expense	-	38.01	151.13	177.65
Less: Short/(excess) provision for tax in respect of previous years	(5.32)	199.79	8.02	215.84
Less: Deferred tax	845.58	(2,772.23)	836.68	(2,774.84)
Net profit/(loss) for the year from continuing operations Discontinued Operations	2,758.50	5,249.12	696.76	5,529.95
Profit/(Loss) before tax from discontinued operations	-	-	-	(209.20)
Tax expense	-	-	-	-
Profit/(loss) for the year from the discontinued operations Other comprehensive income from continuing operations Other comprehensive income from discontinued operations	3.66	(14.70)	67.81	(209.20) (52.72)
Total Other comprehensive income/(loss), net of tax from continuing and discontinued operations Total comprehensive income/(Loss) for the year attributable to:	3.66 2,762.16	(14.70) 5,234.42	67.81 764.57	(52.72) 5,268.03
Shareholders of the company			680.27	5,208.38
Non-controlling interest			84.30	59.65
Profit/(Loss) for the year attributable to Shareholders of the Company	2,758.50	5,249.12	612.30	5,260.24
Add : Profit/(Loss) brought forward from previous periods	(1,294.98)	(6,529.40)	(8,229.62)	(13,594.09)
Add/(Less): Other comprehensive income/(expense)	3.66	(14.70)	(23.08)	104.23
Balance carried forward in Balance Sheet	1,467.18	(1,294.98)	(7,640.40)	(8,229.62)
The detailed State of Company''s Affairs have been outlined in Management Discussion and Analysis Report, which forms part of this Annual Report.

JOINT VENTURE IN CHINA

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

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

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

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

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

SCHEME OF AMALGAMATION

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

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

This strategic amalgamation is expected to enhance operational efficiencies, streamline the corporate structure, and contribute to improved synergies across our business operations. The merger has been accounted as business combination of entities under common control as per Appendix C to Ind AS 103 - Business Combinations. Accordingly, the comparative period for the year ended March 31, 2024 presented in the financial statements has been restated to include the effects of this merger.

CREDIT RATING

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

DIVIDEND AND RESERVES DIVIDEND

The Board of Directors is pleased to recommend a dividend of H 1/- per share (100%) for the year ended March 31, 2025. The dividend is subject to approval of shareholders at the ensuing Annual General Meeting (AGM) and shall be subject to deduction of tax at source. The dividend, if approved by the shareholders, would involve a cash outflow of H 152.79 million.

DIVIDEND DISTRIBUTION POLICY

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

UNCLAIMED DIVIDENDS

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

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

a) TRANSFER OF UNCLAIMED DIVIDEND / DEBENTURE REDEMPTION / DEBENTURE INTEREST TO IEPF:

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

b) TRANSFER OF SHARES TO IEPF

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

TRANSFER TO RESERVES

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

CHANGE IN THE NATURE OF BUSINESS

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

SHIFTING OF REGISTERED OFFICE

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

SHARES AND SHARE CAPITAL INCREASE IN THE AUTHORISED SHARE CAPITAL

In accordance with the Scheme of Amalgamation of Varroc Polymers Limited ("VPL") with Varroc Engineering Limited and their respective Shareholders, upon the Scheme becoming effective from February 01, 2025, the Authorised Share Capital of the Company stands increased from H 50,45,00,000 to H 55,94,00,000 and accordingly, the Clause V(1)(a) of the Memorandum of Association has been substituted as under:

The Authorised Share Capital of the Company is:-

H 55,94,00,000/- (Rupees Fifty-Five Crores Ninety Four Lakhs only) comprising of:

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

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

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

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

During the year under review, there was no change in the paid-up share capital of the Company. The paid-up equity share capital of the Company as on 31^st March 2025 is H 15,27,86,400 comprising of 15,27,86,400 equity shares of H 1/- each. During the year, the Company has not issued any shares or convertible securities. Presently, the Company does not have any scheme for the issue of shares, including sweat equity to the Employees or Directors of the Company.

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

Category	No. of equity shares	% of total paid-up share capital
Promoter and Promoter Group	11,45,89,800	75.00%
Public	3,81,96,600	25.00%
Non-Promoter - Non-Public	-	-
Total	15,27,86,400	100.00%

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

ALTERATION OF OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION OF THE COMPANY

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

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

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

PUBLIC DEPOSITS

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

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

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

â¢ Varrec (Thailand) Co., Ltd.

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

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

MATERIAL SUBSIDIARIES

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

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

DIRECTORS AND KEY MANAGERIAL PERSONNEL

As of March 31, 2025, your Company''s Board had nine members comprising of one Non-Executive Non-Independent Director related to Promoter, Three Executive Directors and Five Non-Executive Independent Directors including Two Woman Directors. The details of Board and Committee composition, tenure of directors, and other details are available in the Corporate Governance Report, which forms part of this Annual Report. In terms of the requirement of the Listing Regulations, the Board has identified core skills, expertise, and competencies of the Directors in the context of the Company''s business for effective functioning. The key skills, expertise and core competencies of the Board of Directors are detailed in the Corporate Governance Report, which forms part of this Annual Report

APPOINTMENT/CESSATION/CHANGE IN DESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Cessation of Director

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

Appointment of Director retire by rotation

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

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

â¢ The Board of Directors based on the recommendation of the Nomination and Remuneration Committee and in terms of Article 23 (l) of the Articles of Association of the Company and Section 161(1) of the Act in its meeting held on March 27, 2025 appointed Mrs. Liselott Kilaas (DIN - 10953529) as an Additional Director of the Company, in the category of Independent Director. Further, the shareholders through special resolution passed by way of postal ballot appointed her as an Independent Director, not liable to retire by rotation, for a period of 5 (Five) years commencing from March 27, 2025 to March 26, 2030.

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

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

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

Retirement of director by rotation

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

DECLARATION FROM INDEPENDENT DIRECTORS

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

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

KEY MANAGERIAL PERSONNEL

In terms of the provisions of Section 203 of the Act, as on March 31, 2025, the Company has the following Key Managerial Personnel:

(a) Mr. Tarang Jain, Chairman & Managing Director

(b) Mr. Arjun Jain, Whole-time Director

(d) Mr. K. Mahendra Kumar, Group Chief Financial Officer

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

COMMITTEES OF BOARD

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

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

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

â¢ Audit Committee

â¢ Nomination & Remuneration Committee

â¢ Stakeholder Relationship Committee

â¢ Risk Management Committee

â¢ Corporate Social Responsibility

â¢ Environment, Social and Governance (ESG) Steering Committee

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

NUMBER OF MEETINGS OF THE BOARD

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

AUDIT COMMITTEE

As on March 31, 2025, the Committee comprises of four directors viz:

1) Mr. Gautam Khandelwal, Chairman

2) Mr. Tarang Jain

3) Mrs. Vijaya Sampath

4) Dr. Vinish Kathuria

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

1) Dr. Vinish Kathuria, Chairman

2) Mrs. Liselott Kilaas

3) Mr. Akshaykumar Chudasama

4) Mr. Tarang Jain

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

FORMAL ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD, ITS COMMITTES AND DIRECTORS

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

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

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

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

BOARD FAMILIARISATION

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

POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

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

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

BOARD DIVERSITY

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

SUCCESSION PLAN

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

DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

b. they have selected such accounting policies and applied them consistently and judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

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

INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

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

RISK MANAGEMENT

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

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

BOARD POLICIES

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

MANAGEMENT DISCUSSION AND ANALYSIS

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

CORPORATE GOVERNANCE

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

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

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT (BRSR)

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

ANNUAL RETURN

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

RELATED PARTY TRANSACTIONS

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

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

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

AUDITORS & AUDITORS REPORT a. STATUTORY AUDITOR

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

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

â¢ As disclosed in note 50 to the consolidated financial statements, the financial results and other financial information for the year ended March 31, 2025 in respect of Varroc TYC Corporation BVI ("China JV"), a joint venture accounted for under the equity method, considered for the purpose of preparation of the consolidated financial statements, is unaudited. Hence, we are unable to determine the impact of Group''s share of profit/ loss from China JV and of the impairment loss recognised for China JV on the consolidated profit/loss before tax, profit/loss after tax, total comprehensive income and earnings per share for the year ended March 31, 2025 and Group''s share of net assets of China JV on the investment in China JV as at March 31, 2025, had the financial results/ other financial information of China JV been audited.

Management Response:

â¢ The Group''s share of net profits of VTYC of H 27.85 million (approx. 1.65% of Profit/(loss) before tax) which is included in the Group''s consolidated profits is based on management certified accounts and was not subjected

to audit. Due to the ongoing arbitration as explained below, the Group was unable to get the financial and other information of VTYC audited from auditors.

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

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

Apart from the above, there are no further qualifications, reservations, or adverse remarks on the financial statements for the year ended March 31, 2025. The notes on the financial statement referred to in the Auditors'' Report are selfexplanatory and do not call for any further comments. The Auditor''s Report is enclosed with the financial statements.

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

(H in Million)
Particular	For the year ended March 31, 2025
Statutory Audit Fees (including limited review)	15.00
Tax Audit Fees	-
Others (including certifications fees, Net of re-imbursements)	6.27
Reimbursement of expenses	0.19
Total	21.46

b. COST AUDITOR

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

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

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

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

C. SECRETARIAL AUDITOR

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. Uma Lodha & Co. (C.P. No.2593 & Peer review Certificate No. 6629/2025) Company Secretaries in Practice, Mumbai, as the Secretarial Auditor to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2025.

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

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

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

ANNUAL SECRETARIAL COMPLIANCE REPORT

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

INTERNAL AUDITOR

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

REPORTING OF FRAUDS BY AUDITORS

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

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE & OUTGO

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

CORPORATE SOCIAL RESPONSIBILITY (CSR)

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

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

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

PARTICULARS OF EMPLOYEES

Your Company had 5,323 employees as on March 31, 2025. The information required under Section 197 of the Act, read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relating to percentage increase in remuneration, ratio of remuneration of each Director and Key Managerial Personnel (KMP) to the median of employees'' remuneration are provided in Annexure - II of this report.

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

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

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

PREVENTION ON SEXUAL HARASSMENT AT WORKPLACE

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

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

During the year under review, your Company has received 4 complaints pertaining to sexual harassment. All complaints have been resolved successfully. There were no complaints pending as on March 31, 2025.

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

VIGIL MECHANISM

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

CYBER SECURITY

In view of increased cyber-attack scenarios, the cyber security is reviewed periodically and the processes, technology controls are being enhanced in-line with the threat scenarios. Your Company''s technology environment is enabled with

real time security monitoring with requisite controls at various layers starting from end user machines to network, servers, application and the data.

CODE FOR PREVENTION OF INSIDER TRADING

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

GENERAL DISCLOSURES

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

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

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

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

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

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

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

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

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

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

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

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

12. The Company uses SAP ECC R6 as the accounting software. SAP ensures an audit trail, providing standard functionality and logging in all changed data in the system. This functionality and audit trail feature in SAP has been

operational throughout the year for all relevant transactions recorded through the application in the Company. Further, there were no instances of the audit trail feature being tampered with in respect of the accounting software during the year.

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

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

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

13. The Certificate duly signed by the Chairman & Managing Director and Group Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2025, as submitted to the Board of Directors at its meeting held on May 29, 2025, is annexed to this report.

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

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

GREEN INITIATIVES

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

ACKNOWLEDGEMENTS

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

Mar 31, 2024

The Board of Directors is delighted to present the 36^th Annual Report on the business operations of Varroc Engineering Ltd. (âthe Companyâ) along with the summary of standalone and consolidated financial statements for the year ended March 31,2024.

In compliance with the applicable provisions of the Companies Act, 2013, (âthe Actâ), the Securities and Exchange Board of India (âSEBIâ) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ), this Board''s Report is prepared based on the operational performance of the Company for the year under review.

OVERVIEW OF FINANCIAL PERFORMANCE

Key highlights of consolidated and standalone financial performance for the year ended March 31, 2024 & March 31, 2023 are summarised as under:

(Rs. in Million)
	STANDALONE		CONSOLIDATED
Particulars	Financial Year	Financial Year	Financial Year	Financial Year
	2023-24	2022-23	2023-24	2022-23
Continuing Operations Revenue from operations	45,349.63	39,401.96	75,519.37	68,912.13
Other Income	382.77	306.97	421.37	297.34
Earnings before Finance Costs, Tax, Depreciation and Amortisation Expenses	4,874.77	3,189.97	8,011.38	6,045.68
Less: Finance costs	1,791.48	1,700.98	1,938.56	1,902.95
Less: Depreciation and Amortisation expenses	1,981.62	1,944.49	3,368.18	3,367.41
Add/(Less): Share of Net Profit/(Loss) of Investment accounted for using the equity Method	-	-	443.96	53.28
Less: Exceptional item	45.00	13,321.90	-	-
Profit/(loss) before tax from continuing operations	1,056.67	(13,777.40)	3,148.60	828.60
Less: Current tax expense	-	137.66	177.65	660.95
Less: Short/(excess) provision for tax in respect of previous years	195.88	(110.90)	215.84	(105.78)
Less: Deferred tax	(2,709.88)	63.78	(2,774.84)	(114.46)
Net profit/(loss) for the year from continuing operations	3,570.67	(13,867.94)	5,529.95	387.89
Discontinued Operations Profit/(loss) before tax from discontinued operations			(209.20)	(8,557.23)
Tax expense	-	-	-	1.91
Profit/(loss) for the year from the discontinued operations	-	-	(209.20)	(8,559.14)
Other comprehensive income from continuing operations	(9.79)	1.83	(52.72)	417.40
Other comprehensive income from discontinued operations	-	-	-	(2,344.95)
Total Other comprehensive income/(loss), net of tax from continuing and discontinued operations	(9.79)	1.83	(52.72)	(1,927.55)

Total comprehensive income/(Loss) for the year:	3,560.88	(13,866.11)	5,268.03	(10,098.80)
Attributable to:
Shareholders of the company			5,208.38	(10,125.22)
Non-controlling interest			59.65	26.42
Profit/(Loss) for the year attributable to Shareholders of the Company	3,570.67	(13,867.94)	5,260.24	(8,198.35)
Add/ (less): Profit/(loss) brought forward from previous periods	(9,592.88)	4,273.23	(13,594.09)	(5,340.83)
Add/(less): Other comprehensive income/ (expense)	(9.79)	1.83	104.23	(54.91)
Balance carried forward in Balance Sheet	(6,032.00)	(9,592.88)	(8,229.62)	(13,594.09)

FINANCIAL LIQUIDITY

Cash and cash equivalent as on March 31,2024, was H 597.12 million vis-a-vis H 1,496.36 million in the previous year. The Company''s working capital management is robust and involves a well-organised process, which facilitates continuous monitoring and control over receivables, inventories and other parameters.

WRITING OFF OF INVESTMENT

During the year, the Company has derecognised (written-off) loans given to VarrocCorp Holding BV (âVCHBV''), Netherlands including interest on such loans aggregating to Rs. 11,796.44 million after making requisite submissions to AD Bank. The Company has claimed this write-off on loans as an allowable business loss, considering that these loans extended to VCHBV were in the nature of trade investments to derive benefits for the Company''s businesses rather than for earning dividend/capital appreciation. The Company has obtained legal opinions from two independent senior counsels who have supported their view on claiming this write-off of loans as an allowable business loss. Accordingly, the Company has considered this loss as tax deductible for computation of tax provision and recognised deferred tax asset of Rs. 2,448.03 million (after adjusting other taxable income pertaining to current financial year). These loans pertained to funding of Varroc Lighting Systems (âVLS'') entities (erstwhile subsidiaries of VCHBV) which were fully provided for during the period ended September 30, 2022 when the VLS business was sold to Compagnie Plastic Omnium SE, France.

ESCROW SETTLEMENT

As reported last year, in relation to sale of (WoS) Global Lighting Business [VLS], the equity value agreed under Securities Purchase Agreement [SPA] was Euro 69.50 million (subject to closing adjustments as provided under the SPA). Later, Settlement Agreement was executed on July 14, 2023 whereby the parties have agreed for a final equity value of Euro 54.50 million.

Accordingly VarrocCorp Holding B.V. received the remaining consideration amount of Euro 13 million on July 17, 2023 pursuant to the terms of the Settlement Agreement.

This Settlement Agreement marks the completion of the sale of VLS Lighting Business.

ELIGIBILITY CERTIFICATE

In the current year, the Company received eligibility certificates (ECs) in respect of three plants in Aurangabad/Pune under the Maharashtra Electronic Policy 2016 effective from April 1, 2022 and valid for 10 years. Under these ECs, the Company is eligible to claim incentive in the form of taxes payable under SGST on finished goods eligible for incentives from the respective plants. The Company has considered these as grants related to income under Ind AS 20 by recognizing the same as income in profit and loss based on SGST collected for the period/year. The amount of income recognised in the current year in respect of the aforesaid ECs is Rs. 989.71 million pertaining to the period April 1,2022 to March 31,2024.

DIVIDEND AND TRANSFER TO RESERVE

With a view to conserve resources for expansion of business, your directors have thought it prudent not to recommend any dividend for the financial year under review. Further, as permitted under the provisions of the Companies Act, 2013 (Act), the Board does not propose transferring any amount to general reserve.

Pursuant to Regulation 43A of the SEBI Listing Regulations, the Board of Directors of the Company had formulated a Dividend Distribution Policy (âthe Policy''). The Policy is available on the Company''s website URL: https://varroc.com/ investors/corporate-governance

CHANGE IN THE NATURE OF BUSINESS

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

SCHEME OF AMALGAMATION

The Board of Directors has approved the draft Scheme of Amalgamation of Varroc Polymers Limited (a wholly owned subsidiary of the Company) with the Company under Sections 230 to 232 (Scheme) and other applicable provisions, if any, of the Companies Act, 2013 and the rules made thereunder (''the Act''). The appointed date of the said scheme is April 01, 2024, or such other date as may be approved by National Company Law Tribunal [NCLT] or any other competent authority.

The Scheme is subject to inter-alia receipt of the approval of the Regional Director, MCA and the Registrar of Companies, NCLT Mumbai Bench and other regulatory authorities, as may be applicable.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

There have been no material changes or commitments that have affected the financial position of the Company between the close of FY 2023-24 and the date of this report including proposed amalgamation of Varroc Polymers Limited (a wholly owned subsidiary of the Company) with the Company.

CAPITAL & DEBT STRUCTURE

There has been no change in the authorised and paid-up share capital of the Company during the financial year ended 31^st March, 2024. The paid-up equity share capital of the Company as on 31^st March 2024 is H 15,27,86,400/- comprising of 15,27,86,400 equity shares of Re. 1/- each.

The Company has not issued any other shares or instruments convertible into equity shares of the Company or with differential voting rights nor has granted any Sweat equity.

Further, the Company does not have any scheme to fund its employees to purchase the shares of the Company.

Non-Convertible Debentures: During the year under review, the Company had raised H 2500 Million through issuance of privately placed rated, listed, senior, secured, redeemable, taxable, transferable Non-Convertible Debentures. The proceeds from the issue have been utilised for repayment of existing listed NCDs, other outstanding debt and for general corporate purposes.

The previous NCDs issued as treated in the Issue Memorandum by the Company in September, 2021 have been fully redeemed in June 2023 [H 1250 Million] and September, 2023 [H 2500 Million] with coupon payments on annualised basis.

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

Category	No. of equity shares	% of total paid-up share capital
Promoter and Promoter Group	11,45,89,800	75.00%
Public	3,81,96,600	25.00%
Non-Promoter - Non-Public	-	-
Total	15,27,86,400	100.00%

MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review, as stipulated under the Securities and Exchange Board of India (SEBI Listing Obligations and Disclosure Requirements), Regulations, 2015, (âSEBI Listing Regulations'') is presented in a separate section, forming part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Report, describing the initiatives taken by your Company from environment, social and governance perspective, for the FY 2023-24, Business Responsibility and Sustainability forms part of this Annual Report as required under Regulation 34(2) (f) of the Listing Regulations.

CORPORATE GOVERNANCE

Your Company believes in attainment of highest levels of transparency in all facets of its operations and maintains an unwavering focus on imbibing good Corporate Governance practices. Your Company continues to strengthen its governance principles to generate long term value for its various stakeholders on a sustainable basis thus ensuring ethical and responsible leadership both at the Board and at the Management levels.

A separate section on Corporate Governance is included in this Annual Report along with requisite certificate from Uma Lodha & Co., practicing Company Secretaries, confirming the compliance, with conditions on Corporate Governance as stipulated in the SEBI Listing Regulations as on 31^st March 2024.

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

CREDIT RATING

The Credit rating of the Company is managed by India Rating and Research Limited. the Financial Year under review, your Company''s long rating, including NCD was at âIND A /Stable''. The rating on the Company''s short-term bank facilities and commercial paper programme has been reaffirmed at âIND A1''.

INVESTOR RELATIONS (IR)

The Company strives for excellence in its investor relations ("IR") engagement with international and domestic investors. There is a structured conference call every quarter to discuss published results. The management has periodic interactions with the financial Community, including investors and analysts, through individual meetings and investor conferences.

The Company participated in investor meetings and conferences organized by reputed broking houses during the year. It is ensured that critical information related to the company is uploaded on the company''s website and made available to the stock exchanges so that it can be accessed easily and equally by all.

DEPOSITS FROM PUBLIC

There were no outstanding deposits within the meaning of Section 73 and 74 of the Act read with rules made thereunder at the end of the FY 2023-24 or the previous financial years. Your Company did not accept any deposit during the period under review.

NUMBER OF MEETINGS OF THE BOARD AND ITS COMMITTEES

Regular meetings of the Board and its Committees are held to discuss and decide on various business policies, strategies, financial matters and other businesses. Due to business exigencies, the Board has also been approving proposals by circulation from time to time.

During FY 2023-24, Five (5) Board Meetings were convened, the details of which are given in the Report on Corporate Governance, which forms part of this Annual Report. The intervening gap between consecutive meetings was not more than one hundred and twenty (120) days as prescribed by the Act and the Listing Regulations.

The Company has the following seven (7) Board-level Committees, which have been established in compliance with the requirements of the business and relevant provisions of applicable laws and statutes:

1. Audit Committee

2. Risk Management Committee

3. Nomination and Remuneration Committee

4. Stakeholders'' Relationship Committee

5. Corporate Social Responsibility Committee

6. Finance Committee

7. ESG Steering Committee

The details with respect to the composition, terms of reference, number of meetings held, etc. of these Committees are included in the Report on Corporate Governance, which forms part of this Annual Report.

AUDIT COMMITTEE

The Audit Committee consists of Mr. Gautam Khandelwal as the Chairman, Mrs. Vijaya Sampath, Mr. Vinish Kathuria and Mr. Tarang Jain, Members. During the year, there were no instances where the recommendations of the Audit Committee were not accepted by the Board.

DIRECTORS & KEY MANAGERIAL PERSONNEL

Cessation of Director

Mr. Rohit Prakash (DIN 02425849), Wholetime Director and Occupier of the plants of the Company resigned from directorship of the Company with effect from August 09, 2023. The Board had expressed its sincere gratitude and placed on record its appreciation of their significant contribution during his tenure as Director of the Company.

Appointment of Director

â¢ The shareholders at their 35^th Annual General Meeting held on September 13, 2023 re-appointed Mr. Tarang Jain (DIN: 00027505), who was retiring by rotation.

â¢ The Board of Directors based on the recommendation of the Nomination and Remuneration Committee and in terms of Article 23 (l) of the Articles of Association of the Company and Section 161(1) of the Act in its meeting held on August 09, 2023 appointed Mr. Tarun Tyagi (DIN 10204986) as an Additional Director of the Company, in the category of Executive/Non-Independent Director. Further, the shareholders at their 35^th Annual General meeting held on September 13, 2023, appointed him as wholetime Director, liable to retire by rotation, for a period of (3) three years commencing from August 09, 2023 to August 08, 2026.

Retirement of director by rotation

Mr. Arjun Jain (DIN 07228175), Executive, non- independent director and Mr. Dhruv Jain (DIN 09710448), Non-executive, non- independent director of the Company will retire by rotation at the ensuing 36^th AGM and being eligible, offers themselves for re-appointment.

The Nomination and Remuneration Committee and the Board of Directors recommends to the Members passing of the ordinary resolution for re-appointment of Mr. Arjun Jain and Mr. Dhruv Jain as Director retiring by rotation.

Declaration from Independent Directors

The Company has, inter alia, received the following declarations from all the Independent Directors confirming that:

â¢ they meet the criteria of independence as prescribed under the provisions of the Act, read with the Rules made thereunder and Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company;

â¢ they have complied with the Code for Independent Directors prescribed under Schedule IV to the Act; and

â¢ they have registered themselves with the Independent Director''s Database maintained by the Indian Institute of Corporate Affairs.

KEY MANAGERIAL PERSONNEL

In terms of the provisions of Section 203 of the Act, as on March 31, 2024, the Company has the following Key Managerial Personnel:

(a) Mr. Tarang Jain, Chairman & Managing Director

(b) Mr. Arjun Jain, Whole-time Director

(d) Mr. K. Mahendra Kumar, Group Chief Financial Officer

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

ANNUAL EVALUATION MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS

According to the provisions of the Act, the corporate governance requirements as prescribed by the SEBI Listing Regulations, the Board of Directors has carried out an annual evaluation of its own performance, board committees and individual directors.

The Nomination & Remuneration Committee (NRC) has defined the evaluation criteria for the performance evaluation of individual Directors, the Board and its Committees. The performance of the Board was evaluated by the Board of Directors after seeking input from all the Directors on the basis of criteria such as structure of the board, meetings and functions of the board, degree of fulfilment of key responsibilities, establishment and delineation of responsibilities to committees, effectiveness of board processes, information and functioning and quality of the relationship between the Board and the Management, etc. The performance of the Committees was evaluated by the Board after seeking input from the Committee Members on the basis of criteria such as mandate and composition, effectiveness of the committee, structure of the committee and meetings, independence of the committee from the board, contribution to decisions of the board, effectiveness of the meetings and quality of the relationship of the committee with the Board and the Management, etc.

The Board and the NRC reviewed the performance of the individual Directors on the basis of criteria such as knowledge and competency, fulfilment of functions, ability to function as a team, initiatives taken, availability and attendance at meetings, integrity, independence, contribution at board/committee meetings and guidance/support to the management outside board/committee meetings, etc. In addition, the Chairman was also evaluated on key aspects of his role, including effectiveness of leadership and ability to steer the meetings, impartiality, ability to keep shareholders'' interests in mind and motivating and providing guidance to the executive directors, etc.

Performance of Non-Independent Directors, performance of the Board as a whole, and performance of the Chairman of the Company were evaluated in a separate meeting of Independent Directors, taking into account the views of Executive Director and Non-Executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its Committees and individual Directors was also

discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

POLICY ON APPOINTMENT OF DIRECTORS AND REMUNERATION

The management of the Company is immensely benefitted from the guidance, support and mature advice from members of the Board of Directors who are also members of various committees. The Board consists of directors possessing diverse skill, rich experience to enhance quality of its performance. The Company has adopted a Policy on Board Diversity formulated by the Nomination and Remuneration Committee.

The Company''s Remuneration Policy is framed for remuneration of Directors (Executive and Non-Executive), Key Managerial Personnel and Senior Management Personnel in line with the requirement of the Section 178 of the Act, Regulation 19 read with Part D of Schedule II of the Listing Regulations. The said Policy is available on the Company''s website at the weblink: https://varroc.com/investors/corporate-governance/.

The main objective of the said Policy is to ensure that the level and composition of remuneration are reasonable and sufficient to attract, retain, and motivate the Directors, Key Managerial Personnel (KMP) and senior management employees. The remuneration involves a balance between fixed and incentive pay, reflecting short- and long-term performance objectives appropriate to the workings of the Company and its goals. The extract of the said Policy is also covered in the Corporate Governance Report which forms part of this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year ended 31^st March 2024.

Accordingly, pursuant to Section 134(3)(c) and 134(5) of the Act, the Board of Directors, to the best of their information and knowledge, confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

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

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act 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;

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

AUDITORS & AUDITORS REPORT

a. STATUTORY AUDITOR

The Auditor''s report for FY 2023-24 on the consolidated financial statements of the Company contains the following qualification:

â¢ As disclosed in note 50 to the consolidated financial statements, the financial results and other financial information for the year ended March 31, 2024 in respect of Varroc TYC Corporation BVI ("China JV"), a joint venture accounted for under the equity method, considered for the purpose of preparation of the consolidated financial statements, is unaudited. Hence, we are unable to determine the impact of Group''s share of profit/ loss from China JV on the consolidated profit/loss before tax, profit/loss after tax, total comprehensive income and earnings per share for the year ended March 31,2024 and Group''s share of net assets of China JV on the investment in China JV as at March 31, 2024, had the financial results/ other financial information of China JV been audited.

Management Response:

â¢ The Group''s investment in Varroc TYC Corporation BVI (âVTYC'' or âChina JV''), a joint venture accounted for under the equity method, which is carried at H 4,044.50 million as at March 31, 2024, and the Group''s share of VTYC''s net profit of H 428.79 million which is included in the Group''s income for the period then ended are based on management certified accounts and were not subjected to audit. The Group is currently undertaking negotiations with the JV partner for resolution of certain matters regarding operation of the JV, pending which the Group is unable to get the financial and other information of VTYC.

Apart from the above, there are no further qualifications, reservations, or adverse remarks on the financial statements for the year ended March 31,2024. The notes on the financial statement referred to in the Auditors'' Report are selfexplanatory and do not call for any further comments. The Auditor''s Report is enclosed with the financial statements.

J in million)
Particular	For the year ended March 31,2024
Statutory Audit Fees (including limited review)	17.93
Tax Audit Fees	-
Others (including certifications)	4.13
Reimbursement of expenses	0.43
Total	22.49

b. COST AUDITOR

In accordance with Section 148 of the Companies Act, 2013, based on the recommendation of the Audit Committee, the Board of Directors of the Company, at their meeting held on May 17, 2024, re-appointed M/s S. R. Bhargave & Co., Cost Accountants, Pune (Firm Registration No. M - 000218), as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by the Company for the Financial Year ending 31^st March,2025. M/s S. R. Bhargave & Co., have confirmed that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) read with Section 148(5) of the Companies Act, 2013.

The Cost Audit Report for the Financial Year 2023-24 will be filed within the stipulated period.

C. SECRETARIAL AUDITOR

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s. Uma Lodha & Co. (C.P.No.2593), Company Secretaries in Practice, Mumbai, as the Secretarial Auditor to undertake the Secretarial Audit of the Company for the financial year ended March 31,2024.

The Secretarial Audit Report for the Financial Year ended 31^st March, 2024 is annexed herewith and forms an integral part of this report. The report does not contain any qualification, reservation, or adverse remark or disclaimer. Further, the Company is in compliance with the Secretarial Standards, specified by the Institute of Company Secretaries of India (âICSI'').

Secretarial Audit of Material Unlisted Indian Subsidiary

Varroc Polymers Ltd. (VPL), is a material subsidiary of the Company. The Secretarial Audit of VPL for the financial year ended 31^st March, 2024 was carried out pursuant to Section 204 of the Companies Act, 2013 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 by M/s Uma Lodha & Co. (C.P. No.2593), Company Secretaries in Practice, Mumbai. The Secretarial Auditor''s Report of VPL, is annexed herewith and forms an integral part of this report.

ANNUAL SECRETARIAL COMPLIANCE REPORT

The Company has undertaken an audit for the Financial Year ended 31^st March, 2024 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by M/s Uma Lodha & Co. (C.P. No.2593), Company Secretaries in Practice, Mumbai has been submitted to the Stock Exchanges within the prescribed timelines. The said report does not contain qualification, reservation or adverse remark.

INTERNAL AUDITOR

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

The disclosures required to be made under Section 134(3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are provided in Annexure - I.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENT

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures with respect to the remuneration of Directors, KMPs and employees as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure II to this Report.

Further, as required under provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement including the names and other details of the top ten employees in terms of remuneration drawn and the name of every employee, who were in receipt of remuneration not less than H 10,200,000/- per annum during the year ended 31^st March, 2024 or employees who were employed for a part of the Financial Year and were in receipt of remuneration of not less than H 8,50,000/- per month during any part of the said year is included as an annexure to this report. In terms of the proviso to Section 136(1) of

the Act, the Report and Accounts are being sent to the members excluding the aforesaid annexure. The said statement is kept open for inspection during working hours at the registered office of the Company. Any member who is interested in obtaining these, may write to Group General Counsel & Company Secretary at the registered office of the Company.

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

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

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Our Policy on Related Party Transactions is intended to ensure that proper reporting, approval, and disclosure processes are in place for all transactions between the Company and its Related Parties. It ensures that all related-party transactions are carried out as per arm''s length parameters and adequate information is provided to shareholders bringing transparency.

All Related Party Transactions are placed before the Audit Committee for its review and approval. Only independent directors who are members of the Audit Committee approve the same. Prior omnibus approval is obtained for RPTs on a quarterly basis for transactions which are of repetitive nature and/or entered in the ordinary course of business and are at arm''s length. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or others, that may have a potential conflict with the interests of the Company at large or that warrant the approval of the shareholders. No material contracts or arrangements with related parties were entered into during the year. The Company has nothing to report in Form AOC-2, hence, the same is not annexed.

In line with the requirements of the Companies Act, 2013 and Listing Regulations, the Company has formulated a Policy on Related Party Transactions (RPTs), including any amendments thereto for identifying, reviewing approving and monitoring of RPTs. The said policy is available on the Company''s https://varroc.com/investors/corporate-governance/.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

The Company has adopted a Whistle Blower Policy, as part of Vigil Mechanism to provide appropriate avenues to all individuals associated with the Company to bring to the attention of the Management any issue which is perceived to be in violation of or in conflict with the Code of the Company. The Policy provides for adequate safeguards against victimisation of employees who avail themselves of the mechanism. No person has been denied access to the Chairman of the Audit Committee. All cases, registered under the Code and the Whistle Blower Policy of the Company, are reported to the Management Committee and are subject to the review of the Audit Committee. The Whistle Blower policy is uploaded on the website of the Company at https://varroc.com/investors/corporate-governance/.

RISK MANAGEMENT

The Company has constituted a Risk Management Committee (RMC) consisting of Board Members and Senior Management Personnel and has delegated the function of formulating, implementing, monitoring, and reviewing the risk management policy to the Committee. It has a defined risk control and management policy in place that is consistent with the provisions of the Act and the SEBI Listing Regulations. The RMC Committee plays a pivotal role in supervising the way in which management oversees adequacy, adherence & effectiveness to the Company''s risk management framework, considering the risks the business challenges and opportunities. A business-centric approach to risk management is used to identify potential risks. Based on materiality of the risk, response strategies are developed and assigned to concerned risk owner. The process of risk management helps to identify, prioritise, mitigate, monitor, and appropriately report any significant threat to the organisation''s strategic objectives, its reputation, operational continuity, environment, compliance, and the health & safety of its employees. The Company has established procedures to periodically place before the Board/Audit Committee, the risk assessment and minimisation procedures being followed by the Company and the steps taken by it to mitigate the Risks.

INTERNAL CONTROL SYSTEM AND THEIR ITS ADEQUEACY

The Company has a defined organisational structure, documented policy guidelines, and a defined authority matrix that ensures efficiency of operations, compliance with internal policies and applicable laws and regulations, as well as protection of resources. The Company advocates that a strong internal control system complements strong Governance processes and plays a critical role efficient conduct of in the day-to-day operations of the Company.

To this end, the Company has put in place an effective internal control system to synchronise its business processes, operations, financial reporting, fraud control, and compliance with extant regulatory guidelines and compliance parameters. The Company ensures that a standard and effective internal control framework operates throughout the organisation, providing assurance about the safekeeping of the assets and the execution of transactions as per the authorisation in compliance with the internal control policies of the Company.

The internal control system is supplemented by extensive internal audits, regular reviews by the management, and guidelines that ensure the reliability of financial and all other records. The management periodically reviews the framework, efficacy, and operating effectiveness of the Internal Financial Controls of the Company.

A comprehensive Internal Audit Programme has been instituted by internal audit function of the Company, which presents the paramount observations on a quarterly basis before the Audit Committee and the Board for review. The Internal Audit function helps anchor, supervise, and monitor the effectiveness and adequacy of control systems. Internal Audits are carried out to review the adequacy of the internal control systems and compliance with policies and procedures.

SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE COMPANIES

As defined under the Act, the Company has 16 subsidiaries, including step-down subsidiaries, and 3 joint venture Companies as on March 31,2024.

Companies that have become or ceased to be Subsidiaries, Joint Ventures, and Associates

â¢ Companies which have become subsidiaries - Varroc Czech Republic s.r.o.

â¢ Companies which have ceased to be a Joint Venture of the Company: Nil

â¢ Companies which have become a Joint Venture of the Company: Nil

â¢ Companies which have become an associate of the Company: Nil

Material Subsidiaries

The Company has 1 unlisted material subsidiary incorporated in India i.e. Varroc Polymers Ltd. The Policy for determining Material Subsidiaries as formulated in line with the requirements of the Act and the Listing Regulations, and the same can be accessed on the Company''s website at https://varroc.com/investors/corporate-governance/.

Consolidated Financial Statements

According to Section 129(3) of the Act, the consolidated financial statements of the Company and its subsidiaries, joint ventures, and associates are prepared in accordance with the relevant Indian Accounting Standard specified under the Act, and the rules thereunder and form part of this Annual Report. A statement containing the salient features of the financial statements of the Company''s subsidiaries, joint ventures, and associates in Form No. AOC-1 is given in this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

The Company is a strong believer in the Varroc Group philosophy of giving back to the community and acknowledging the role played by communities in the growth of our business. Our various CSR initiatives ensure a better environment for everyone. The Company assists in promoting rural and nationally recognized sports and environmental sustainability.

CSR activities, projects, and programs undertaken by the Company are in accordance with Section 135 of the Act and the rules made thereunder. Such CSR activities exclude activities undertaken in pursuance of its normal course of business.

Under Section 135 of the Act, the Company was required to spend H 7.38 million (2% of the average qualifying net profits of the last three financial years) on CSR activities on projects in FY 2023-24. During the year under review, the Company has spent H 15.22 million on CSR activities. The Company has fulfilled its obligation of spending CSR amount as per Section 135 of the Act for FY 2023-24. The Board of Directors has approved the same.

The Annual Report on CSR containing particulars as prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 are provided in Annexure - III annexed to this Report. The CSR Policy may be accessed on the Company''s website at the link: https://varroc.com/investors/corporate-governance/.

CERTIFICATES/CONFIRMATIONS/DECLARATIONS/AFFIRMATIONS DURING THE YEAR UNDER REVIEW

â¢ In the preparation of the financial statements, the Company has followed the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with relevant rules thereunder. The Significant Accounting Policies which are consistently applied have been set out in the notes to the financial statements.

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

â¢ The Company uses SAP ECC R6 as the accounting software. SAP ensures an audit trail, providing standard functionality and logging in all changed data in the system. This functionality and audit trail feature in SAP has been operational throughout the year for all relevant transactions recorded through the application in the Company.

â¢ 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 the future.

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

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

â¢ The Certificate duly signed by the Chairman & Managing Director and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31,2024, as submitted to the Board of Directors at its meeting held on May 17, 2024, is annexed to this report.

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

â¢ The details of an application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year - Nil.

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

â¢ During FY 2023-24, Mr. Tarang Jain, Chairman & Managing Director, and Mr. Arjun Jain, Whole-Time Director, received remuneration of H 39.58 million and H 3.66 million, respectively, from material subsidiary Varroc Polymers Ltd.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

a) TRANSFER OF UNCLAIMED DIVIDEND / DEBENTURE REDEMPTION / DEBENTURE INTEREST TO IEPF:

b) TRANSFER OF SHARES TO IEPF

ANNUAL RETURN

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

DISCLOSURE AS REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has a policy for prevention of Sexual Harassment for Women at Workplace. An Internal Complaints Committee has been constituted in line with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (âPOSH''). During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. At multiple times, the Company had arranged an online orientation programme and workshops, for its Internal Committee Members under POSH Act, at PAN India Level, in order to make them proficient to discharge their duties. The training was attended by all the Internal Committee Members at PAN India. The Company has in place a Module on "PREVENTION OF SEXUAL HARASSMENT IN WORKPLACE (POSH) in -MyCoach E-Learning Platform, for sensitising the employees with the provisions under the POSH.

GREEN INITIATIVES

As a responsible corporate entity, the Company wholeheartedly endorses and supports the âGreen Initiative'' launched by the Ministry of Corporate Affairs, Government of India. This initiative facilitates electronic delivery of documents, including the Annual Report, quarterly and half-yearly results, and other such documents, to shareholders'' registered e-mail addresses with their DPs or with the Company or its RTA. An electronic copy of the Notice of the 36^th Annual General Meeting of the Company shall be sent to all Members whose email addresses are registered with the Company/ Depository Participant(s).

ACKNOWLEDGEMENTS

Your Directors place on record their acknowledgement for the co-operation received from the Customers, Vendors, Bankers, Associates, Collaborators and the Employees of the Company, without which it would not have been possible for the Company to achieve its performance and growth.

The Directors also thank the Government of India, the Government of various states in India, the Government of various countries, and the concerned government departments and agencies for their co-operation.

Mar 31, 2023

The Directors of your Company take pleasure in presenting the 35th Annual Report on the business and operations of the Company together with financial statements for the financial year ended March 31,2023.

FINANCIAL RESULTS & APPROPRIATION

As reported last year and pursuant to the Securities Purchase Agreement ["SPA"], your Company has divested its 4-wheeler lighting system operations in Americas & Europe and identified R&D business in India to Compagnie Plastic Omnium SE of France and its Affiliate/Associate Companies, and Subsidiaries by signing Business Transfer Agreement and other related agreements/documents with the subsidiaries and other parties involved.

The deal size of â¬600 million was adjusted downward by â¬80 million due to higher raw material inflation, lower demand caused by the Ukraine war, and other geopolitical issues.

The said divestment was concluded on October 06, 2022. Your Company continues its lighting operations in Asia and continues to operate its joint venture in China, other international two-wheeler business in Italy and Vietnam, and global electronics business in Poland and Romania.

The said transaction enabled the Company to focus on emerging areas such as electric vehicle components, electronics, and connectivity in the Indian market and the global two-wheeler lighting business.

The equity value agreed under the SPA was â¬69.5 Million (subject to closing adjustments as provided under SPA). In our standalone financials, the Company has recognised loss on equity investments and loans given to Varroc lighting systems operations ("VLS Business") of Rs. 13,240 million during the quarter ended September 30, 2022, as an exceptional item. Further loss of Rs. 81.90 million recognised during the quarter March 31, 2023, pertains to expenses related to sale of investment in VLS business. Pursuant to amendment to SPA on May 12, 2023, a mutual settlement is being attempted for the disagreements between the parties in accordance with the provisions of SPA.

The summarized Financial Results for the year ended March 31, 2023, and for previous year ended March 31, 2022 are as follows:

FINANCIAL RESULTS & APPROPRIATION

The summarized Financial Results for the year ended March 31, 2023, and for previous year ended March 31, 2022 are as follows:

(Rs. in Million)
Particulars	STANDALONE		CONSOLIDATED
Particulars	Financial Year 2022-23	Financial Year 2021-22	Financial Year 2022-23	Financial Year 2021-22

Continuing Operations
Revenue from operations	39,178.90	32,918.07	68,630.66	58,442.01
Other Income	530.03	646.14	578.81	339.33
Earnings before interest, tax, depreciation and amortisation	3,189.97	3,060.34	6,045.68	3,932.72
Less: Finance cost	1,700.98	909.76	1,902.95	1,183.52
Less: Depreciation and amortization	1,944.49	1,703.49	3,367.41	3,045.47
Add/(Loss): Share of Net Profit/(Loss) of Investment accounted for using the equity Method			53.28	(4.33)
Less: Exceptional item	13,321.90	-	-	-
Profit/(loss) before tax from continuing operations	(13,777.40)	447.09	828.60	(300.60)
Less: Current tax expense	137.66	79.92	660.95	347.97
Less: Short/(excess) provision for tax in respect of previous years	(110.90)	(0.11)	(105.78)	2.23
Less: Deferred tax	63.78	107.43	(114.46)	132.05
Net profit/(loss) for the year from continuing operations	(13,867.94)	259.85	387.89	(782.85)

(Rs. in Million)
	STANDALONE		CONSOLIDATED
Particulars	Financial Year	Financial Year	Financial Year	Financial Year
	2022-23	2021-22	2022-23	2021-22
Discontinued Operations
Total Income	-	-	38,659.62	69,095.14
Profit/(Loss) before tax from discontinued operations	-	-	(8,557.23)	(10,348.85)
Tax expense	-	-	1.91	(64.43)
Profit/(loss) for the year from the discontinued operations	-	-	(8,559.14)	(10,284.42)
Other comprehensive income from continuing operations	1.83	(19.63)	417.40	(211.34)
Other comprehensive income from discontinued operations	^-	^-	(2,344.95)	916.82
Total Other comprehensive income/(loss), net of tax from continuing and discontinued operations	1.83	(19.63)	(1,927.55)	705.48
Total comprehensive income/(Loss) for the year attributable to:	(13,866.11)	240.22	(10,098.80)	(10,361.79)
The Shareholders of the Company	-		(10,125.22)	(10,391.93)
Non-controlling interest	-		26.42	30.14
Profit for the year attributable to owners of the Company	(13,867.94)	259.85	(8,198.35)	(11,098.79)
Add : Profit/(Loss) brought forward from previous periods	4,273.23	4,033.00	(5,340.83)	5,797.10
Add/(Less): Other comprehensive income	1.83	(19.63)	(54.91)	(39.14)
Balance carried forward in Balance Sheet	(9,592.88)	4,273.22	(13,594.09)	(5,340.83)

DIVIDEND AND TRANSFER TO RESERVE

In view of the losses sustained during the year, and with a view to conserve resources for expansion of business, your Directors have thought it prudent not to recommend any dividend for the financial year under review. Further, no transfer to the General Reserve before declaration of Dividend has been considered.

Pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI Listing Regulations], the Board of Directors of the Company had formulated a Dividend Distribution Policy (âthe Policy''). The Policy is available on the Company''s website URL: https://varroc. com/investors/corporate-governance

CHANGE IN THE NATURE OF BUSINESS

The Company is engaged in the business of manufacturing automotive components. There has been no change in the business of the Company during the financial year ended March 31,2023.

CAPITAL & DEBT STRUCTURE

There has been no change in the authorised and paid-up share capital of the Company during the financial year ended March 31, 2023. The paid-up Equity Share capital of the Company as on March 31,2023 is Rs. 15,27,86,400/-comprising of 15,27,86,400 Equity Shares of Re. 1/- each.

The Company has not issued shares with differential voting rights. The Company has neither issued employee stock options nor sweat Equity Shares and does not have any scheme to fund its employees to purchase the shares of the Company.

Further, the Company has not issued any debt instruments during the year under review.

In the month of April 2023, the Company has acquired additional Equity Shares in its subsidiary Company, CarIQ Technologies Pvt. Ltd. increasing the stake to 95% from its original promoters. Necessary formalities, including intimation, have been completed under Regulation 30 of the Listing regulations to the Stock Exchanges.

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

Category	No. of Equity Shares	% of total paid-up share capital

Promoter and Promoter Group	11,45,89,800	75.00
Public	3,81,96,600	25.00
Non-Promoter - NonPublic	^-	^-
Total	15,27,86,400	100.00

MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

The Industry outlook and the operational performance of the Company have been comprehensively covered in the Management Discussion and Analysis section of the Report (MD&A). A separate section on MD&A is included in the Annual Report as required under Regulation 34(2) (e) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing Regulations").

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Pursuant to Regulation 34(2) (f) of the SEBI Listing Regulations, the initiatives taken by the Company from an environmental, social, and governance perspective are provided in the Business Responsibility and Sustainability Report [BRSR] which is included as a separate section in the Annual Report.

CORPORATE GOVERNANCE

The Board of Directors affirm their continued commitment to good corporate governance practices. During the year under review, the Company complied with the provisions relating to corporate governance as provided under the Listing Regulations. The Corporate Governance Report, together with the requisite certificate from Uma Lodha & Co., practicing Company Secretaries, confirming the compliance, is provided in the Report on Corporate Governance, which forms part of the Annual Report.

CREDIT RATING

The Credit rating of the Company is managed by ICRA Limited. During the Financial Year under review, your Company''s long rating, including NCD was at â[ICRA]A

(stable)''. The rating on the Company''s short-term bank facilities and commercial paper programme has been reaffirmed at â[ICRA]A2 ''.

In addition to this, India Rating has assigned âIND A1'' commercial paper programme in February 2023. The Company has also been assigned credit rating of IND A (Stable)/IND A1 by India Rating for long term/ short term facilities in April 2023.

INVESTOR RELATIONS (IR)

The Company participated in investor meetings and conferences organized by reputed broking houses during the year. It is ensured that critical information related to the Company is uploaded on the Company''s website and made available to the stock exchanges so that it can be accessed easily and equally by all.

DEPOSITS FROM PUBLIC

During the year under review, the Company has not accepted any deposits from the public. As on March 31, 2023, there were no deposits that were unclaimed and due for repayment.

NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met 9 (Nine) times during the Financial Year 2022-23 and the particulars of the meetings held and attended by each Director are given in the Corporate Governance Report which forms part of this Annual Report. The intervening gap between consecutive meetings was not more than one hundred and twenty (120) days as prescribed by the Companies Act, 2013 ("the Act"), and the Listing Regulations. The details of the Board and various Committee meetings are given in the Corporate Governance Report.

COMPOSITION OF AUDIT COMMITTEE

The Board has constituted the Audit Committee, which has Mr. Gautam Khandelwal as Chairman, Mrs. Vijaya Sampath and Mr. Vinish Kathuria Independent Directors

as Members and Mr. Tarang Jain, Chairman & Managing Director as Member. More details on the committee are given in the Corporate Governance Report forming part of this annual report. During the year under review, the recommendations made by the Audit Committee were duly accepted by the Board.

DIRECTORS & KEY MANAGERIAL PERSONNEL

At the Thirty Fourth Annual General Meeting (AGM) of the Company held on September 29, 2022, the shareholders approved the following appointment/ re-appointment:

â¢ Re-appointment of Mr. Rohit Prakash (DIN: 02425849) as Director of the Company, liable to retire by rotation.

â¢ Re-appointment of Mr. Tarang Jain (DIN 00027505) with the designation of Chairman & Managing Director of the Company, being liable to retire by rotation, for a further period of three (3) consecutive years from February 6, 2023 to February 5, 2026.

â¢ Re-appointment of Mr. Arjun Jain (DIN 07228175) with the designation of whole-time Director of the Company, being liable to retire by rotation, for a further period of three (3) consecutive years from August 7, 2023, to August 6, 2026.

â¢ Re-appointment of Mr. Vinish Kathuria (DIN 01951771) as an Independent Director of the Company, not being liable to retire by rotation, for his second term from February 6, 2023 upto February 5, 2028.

â¢ Appointment of Mr. Dhruv Jain (DIN 09710448) with the designation of Non-executive Non-independent Director of the Company, being liable to retire by rotation.

â¢ In accordance with the provisions of the Act and in terms of the Articles of Association of the Company, Mr. Tarang Jain (DIN 00027505) is liable to retire by rotation at the ensuing AGM and is eligible for re-appointment. A Resolution seeking the Shareholders'' approval for his re-appointment along with other required details forms part of the Notice.

In terms of Section 149 of the Act and the Listing Regulations, Mr. Gautam Khandelwal, Mrs. Vijaya Sampath, Mr. Marc Szulewicz and Mr. Vinish Kathuria are the Independent Directors of the Company as of the date of this report. All the Independent Directors have submitted declarations that each of them meets the criteria of independence as

laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations, and there has been no change in the circumstances that may affect their status as independent Directors during the year. The profile of the Independent Directors forms part of the Corporate Governance Report.

During the year, the Independent Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board of Directors and Committee(s) of the Company. The details of remuneration of the Independent Directors are mentioned in the Corporate Governance Report.

In the opinion of the Board, the Independent Directors possess the requisite expertise and experience and are persons of high integrity and repute. They fulfil the conditions specified in the Act as well as the Rules made thereunder and are independent of the management.

KEY MANAGERIAL PERSONNEL

Based on the recommendation of the Nomination and Remuneration Committee and the Audit Committee, the Board of Directors of the Company had approved the appointment of:

â¢ Mr. T.R.Srinivasan resigned as Group Chief Financial Officer of the Company w.e.f. close of working hours on August 31, 2022. The Board of Directors places on record its appreciation for the services rendered by him over the years.

â¢ Mr. K. Mahendra Kumar appointed as Group Chief Financial Officer of the Company w.e.f. September 28, 2022.

In terms of the provisions of Section 203 of the Act, as on March 31 , 2023, the Company has the following Key Managerial Personnel:

(a) Mr. Tarang Jain, Chairman & Managing Director

(b) Mr. Arjun Jain, Whole-time Director

(d) Mr. K. Mahendra Kumar, Group Chief Financial Officer

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

FORMAL ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD, ITS COMMITTEES AND DIRECTORS

The Board, the Committees of the Board and independent Directors continuously endeavour for the efficient functioning of the Board and its Committees and better corporate governance practices. A formal performance evaluation was carried out at the meeting of the Board of Directors held on May 23, 2023, where the Board made an annual evaluation of its own performance, the performance of Directors individually, as well as the evaluation of the working of its various Committees for the Financial Year 2022-23 on the basis of a structured questionnaire on performance criteria. The Board expressed its satisfaction with the evaluation process.

The evaluation process endorsed showiness amongst Directors, the openness of the management in sharing the information with the Board (including committees thereof) and placing various proposals for the Board''s (including committees thereof) consideration and approval.

The Independent Directors met on May 23, 2023, without the presence of other Directors or Members of management. All the Independent Directors were present at the meeting. In the meeting, the Independent Directors reviewed the performance of Non-Independent Directors, the Board as a whole, and the Chairman. They assessed the quality, quantity, and timeliness of the flow of information between the management of the Company and the Board. Post the review by the Independent Directors, the results were shared with the entire Board and its respective committees. The Independent Directors expressed satisfaction over the performance and effectiveness of the Board, individual non-Independent Directors, and the Chairman. They also expressed satisfaction with regard to the flow of information between the management of the Company and the Board.

The Members of the Audit Committee without the presence of Members of management also had a separate meeting with credit rating agencies.

POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

In adherence to the provisions of Section 134(3)(e) and 178(1) & (3) of the Act, the Board of Directors upon recommendation of the Nomination and Remuneration Committee, has approved a policy on Director''s appointment and remuneration, including criteria for determining qualifications, positive attributes,

independence of a Director and other matters. The said Policy is uploaded on the Company''s website at https://varroc.com/ investors/corporate-governance/.

The main objective of the said Policy is to ensure that the level and composition of remuneration are reasonable and sufficient to attract, retain, and motivate the Directors, Key Managerial Personnel (KMP) and senior management employees. The remuneration involves a balance between fixed and incentive pay, reflecting short and long-term performance objectives appropriate to the workings of the Company and its goals. The extract of the said Policy is also covered in the Corporate Governance Report which forms part of this Report.

POLICIES AND CODE ADOPTED BY THE COMPANY

The Board of Directors has, from time to time, framed and approved policies/codes as required by the Listing Regulations as well as under the Act. These policies/codes will be reviewed by the Board at periodic intervals. The Company has adopted the following policies/codes:

(i) Policy for Board Diversity-Appointment-RemunerationTraining and Evaluation of Directors and Employees (ii) Material Subsidiary Policy (iii) Policy for determination of materiality threshold for Disclosure of Events (iv) Code for Disclosure of Unpublished Price Sensitive Information (v) Code of Conduct for Insider Trading (vi) Policy on Preservation of Information and Archival of documents (vii) Policy on Related Party Transactions (viii) Code of Conduct for Directors and Senior Management Personnel (ix) Enterprise Risk Management Policy (x) Whistle Blower Policy (xi) Dividend Distribution Policy (xii) Environment, Social & Governance [ESG] policy (xiii) Corporate Social Responsibility [CSR] policy (xiv) Policy on prevention of sexual harassment.

The above policies are available on the Company''s website on the link https://varroc.com/investors/ corporate-governance/

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act, the Board of Directors, based on the representation received from the Management to the best of their knowledge and ability, confirm that:

(a) in the preparation of the annual accounts for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2023 and of the loss 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 this Act 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 such internal financial controls are adequate and operating effectively; and

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

AUDITORS & AUDITORS REPORT

a. STATUTORY AUDITOR

M/s SRBC & Co. LLP, Chartered Accountants (ICAI Firm Registration No. 324982E/E300003), were appointed as Statutory Auditors of the Company for a term of 5 (five) years at the 30th AGM held on September 05, 2018, to hold office from the conclusion of the said meeting till the conclusion of the 35th AGM to be held in the year 2023. The term of office of M/s SRBC & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company will conclude with the close of the forthcoming AGM of the Company.

The Board of Directors at their meeting held on May 23, 2023, re-appointed M/s S R B C & Co. LLP, Chartered Accountants, as the Statutory Auditors of the Company to hold office from the conclusion of the 35th AGM till the conclusion of the 40th AGM to be held in the year 2028, based on the recommendation of the Audit Committee and subject to the approval of the shareholders at the ensuing 30th AGM. The Statutory Auditors have confirmed their independent status and eligibility for the said re-appointment.

The Audit report on the Consolidated financial statements

of the Company contains the following qualifications:

â¢ As disclosed in Note no. 50 to the consolidated financial statements for the year ended March 31, 2023, the Financial Results and other financial

information for the year ended March 31, 2023, in respect of Varroc TYC Corporation BVI ("China JV"), a joint venture accounted for under the equity method, considered for the purpose of preparation of the consolidated financial statements, are unaudited. Hence, we are unable to determine the possible impact of Group''s share of profit/loss from China JV on the consolidated profit/loss before tax, profit/loss after tax, total comprehensive income, and earnings per share for the year ended March 31, 2023 and Group''s share of net assets of China JV on the investment in China JV as at March 31,2023.

Management Response:

The Group''s investment in Varroc TYC Corporation BVI (âVTYC'' or âChina JV''), a joint venture accounted for under the equity method, which is carried at Rs. 3,751.57 million as at March 31, 2023, and the Group''s share of VTYC''s net profit of Rs. 15.58 million, which is included in the Group''s income for the year then ended, are based on management certified accounts and were not subjected to audit. The Group is currently undertaking negotiations with the JV partner for resolution of certain matters regarding the operation of the JV, pending which the Group is unable to obtain audited financials and other information from the China JV.

â¢ As provided in Note no. 51 to the Consolidated Financial Statements for the year ended March 31, 2023, regarding the sale of Varroc Lighting Systems Business, there is disagreement between the parties on the final adjustments against the agreed consideration, and both parties have agreed to negotiate to reach an agreement. Pending the conclusion of these negotiations, we are unable to comment on the impact of the same on the consolidated loss and financial position as of and for the year ended March 31,2023.

Management Response:

prepared as of the Closure Date, i.e., October 6, 2022. The Buyer had a period of 90 working days to come up with the same, duly supported by the requisite information/ documentation.

The Buyer submitted the final adjustments during the current quarter but failed to provide the necessary supporting details to enable the Sellers to understand these adjustments. Hence, Sellers sent a Dispute Notice in accordance with the SPA disputing the proposed adjustments. Pursuant to the amendment to the SPA dated May 12, 2023, both parties have mutually agreed to attempt the Resolution of their disagreements in accordance with the provisions of the SPA. Considering the disagreement between the parties and the fact that the negotiations with the Buyer are in progress, the effect of the proposed adjustments cannot be ascertained for recognition in the consolidated Financial Results as of March 31,2023.

The Audit report on the Standalone financial statements

of the Company contains the following qualifications:

â¢ As provided in Note no. 52 to the standalone financial statements regarding the sale of Varroc Lighting Systems Business, there is disagreement between the parties on the final adjustments against the agreed consideration, and both parties have agreed to negotiate to reach an agreement. Pending the conclusion of these negotiations, we are unable to comment on the impact of the same on the net loss and financial position as of and for the year ended March 31,2023.

Management Response:

As per the terms of the Securities Purchase Agreement ("SPA") entered into among Varroc Engineering Limited ("VEL") and VarrocCorp Holding BV, Netherlands ("VCHBV", wholly owned subsidiary of VEL) (together referred to as "Sellers") and Compagnie Plastic Omnium SE, France ("Buyer"), a specific âAdjustment Escrow'' has been provided for the Final Closing Statement and the Final Closing Adjustment Statement to be prepared as of the Closure Date i.e., October 6, 2022. The Buyer had a period of 90 working days to come up with the same, duly supported by the requisite information/documentation.

The Buyer submitted the final adjustments during the current quarter but failed to provide the necessary supporting details to enable the Sellers to understand these adjustments. Hence, Sellers

sent a Dispute Notice in accordance with the SPA disputing the proposed adjustments. Pursuant to the amendment to SPA dated May 12, 2023, both parties have mutually agreed to attempt the Resolution of their disagreements in accordance with the provisions of the SPA. Considering the disagreement between the parties and the fact that negotiations with the Buyer are in progress, the effect of the proposed adjustments cannot be ascertained for recognition in the standalone Financial Results as of March 31,2023.

Apart from the above, there are no further qualifications, reservations, or adverse remarks on the financial statements for the year ended March 31, 2023. The notes on the financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditor''s Report is enclosed with the financial statements.

Audit Spending (including pertaining to discountinued operations)

(H in Million)
Particular	For the year ended March 31,2023

Statutory Audit fees (Including limited reviews)	48.95
Tax Audit Fees	-
Others (including certifications)	36.40
Re-imbursement of Expenses	0.99
Total	86.34

b. COST AUDITOR

The cost accounts and records are required to be maintained under Section 148(1) of the Act. They are duly made and maintained by the Company. In terms of the provisions of Section 1 48 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors of the Company has, on the recommendation of the Audit Committee, appointed M/s S. R. Bhargave & Co., (Partnership Firm based in Pune Registration No. M - 000218), Cost Accountants, as Cost Auditor of the Company to conduct the cost audit of the Company for the financial year ending

March 31,2024, at a remuneration as mentioned in the Notice convening the 35th AGM.

As required under the Act read with the Companies (Cost Records and Audit) Rules, 2014, the remuneration payable to Cost Auditors must be placed before the Members at a general meeting for ratification. Hence, a Resolution for the same forms part of the notice of the ensuing AGM.

M/s S. R. Bhargave & Co., has confirmed the cost records for the financial year ended March 31, 2023, are free from any disqualifications as specified under Section 141 (3) and the proviso to Section 148(3) read with Section 141(4) of the Act. They have further confirmed their independent status. The Cost Audit Report for the Financial Year 2022-23 will be filed within the stipulated period.

c. SECRETARIAL AUDITOR

In terms of the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Uma Lodha & Co. (C.P. No.2593), Company Secretary in Practice, Mumbai, as the Secretarial Auditor for conducting the Secretarial Audit of the Company for the Financial Year ended March 31,2023.

The Secretarial Audit Report of the Company and Varroc Polymers Ltd. ("VPL"), a material subsidiary of the Company, for the Financial Year 2022-23 is annexed herewith and forms an integral part of this report. The Secretarial Audit Report does not contain any qualification, reservation, or adverse remark. The Company is in compliance with the Secretarial Standards, specified by the Institute of Company Secretaries of India (âICSI'').

ANNUAL SECRETARIAL COMPLIANCE REPORT

As per Regulation 24A of the Listing Regulations, the Company has undertaken an audit for the Financial Year 2022-23 for all applicable compliances as per SEBI Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report has been submitted to the Stock Exchanges.

The annual secretarial compliance report contains the following qualifications:

â¢ Non-disclosure of the extent and nature of security created and maintained with respect to secured listed NCDs in the financial statements

Management response: "This was an inadvertent error and going forward, due care will be taken in this regard.

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

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings, and outgo as required under Section 134 (3)(m) of the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in Annexure - I to this report.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENT

The particulars of loans given, investments made, guarantees given, and securities provided as per Section 186 of the Act by the Company are disclosed in the standalone financial statements.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures required under the provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, containing, inter-alia, the ratio of remuneration of Directors to median remuneration of employees, percentage increase in the median remuneration, are annexed to this Report as Annexure-II.

A statement containing the particulars of the top ten employees and the employees drawing remuneration in excess of limits prescribed under Section 197(12) of the Act, read with Rules 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is an annexure forming part of this Report. In terms of the proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Members excluding the aforesaid annexure. The said statement is kept open for inspection during working hours at the Registered Office of the Company. Any member who is interested in obtaining these, may write to the Group General Counsel & Company Secretary at the Registered Office of the Company.

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

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were in the ordinary course of business and on an arm''s length basis. In accordance with Section 188 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, there were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or others, that may have a potential conflict with the interests of the Company at large or that warrant the approval of the shareholders. No material contracts or arrangements with related parties were entered into during the year.

The Company has nothing to report in Form AOC-2, hence, the same is not annexed.

The related party transactions are placed before the Audit Committee for prior approval, as required under applicable law. Only independent Directors who are Members of the Audit Committee approve the same. Prior omnibus approval of the Audit Committee is also obtained for transactions that are repetitive in nature and entered in the ordinary course of business on an arm''s length basis. A statement of all related party transactions is placed before the Audit Committee for review on a quarterly basis, specifying the nature and value of the transactions.

In line with the requirements of the Companies Act, 2013 and Listing Regulations, the Company has formulated a Policy on Related Party Transactions (RPTs), including any amendments thereto for identifying, reviewing approving and monitoring of RPTs. The said policy has been revised in line with the amendment in Listing Regulations and the same is available on the Company''s website https://varroc.com/wp-content/uploads/bsk-pdf-anager/ 2022 /2/ Policy on Related Party Transactions.pdf

The details of RPTs during FY 2022-23, including transaction(s) with persons or entities belonging to the promoter/ promoter group that hold 10% or more shareholding in the Company are provided in the accompanying financial statements.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

On recommendations of the Audit Committee, the Board of Directors has approved and adopted a Whistle Blower Policy that provides a formal mechanism for the Directors, employees, and other stakeholders of the Company to report their concerns about unethical behaviour, actual or suspected fraud, or violations of the Company''s Code of

Conduct or Ethics Policy. The Policy provides for adequate safeguards against victimisation of employees who avail themselves of the mechanism. The Audit Committee oversees the functioning of this policy. The Whistle Blower Policy has been uploaded on the website of the Company at www.varroc.com.

RISK MANAGEMENT

Your Company has a defined risk control and management policy in place that is consistent with the provisions of the Act and the SEBI Listing Regulations. The Company has established procedures to periodically place before the Board/Audit Committee, the risk assessment and minimisation procedures being followed by the Company and the steps taken by it to mitigate the Risks. The Board of Directors of the Company have constituted a Risk Management Committee consisting of Board Members and Senior Management Personnel and has delegated the function of formulating, implementing, monitoring, and reviewing the risk management policy to the Committee. Further details in respect of the Committee are covered under the heading "Risk Management Committee" in the Corporate Governance Report.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUECY

The Company has a defined organisational structure, documented policy guidelines, and a defined authority matrix that ensures efficiency of operations, compliance with internal policies and applicable laws and regulations, as well as protection of resources. The Company believes that a strong internal control system and processes play a critical role in the day-to-day operations of the Company.

The Internal Audit reports are periodically reviewed by the Audit Committee. The Company has, in material respects, adequate internal financial control over financial reporting, and such controls are operating effectively. Internal Audits are carried out to review the adequacy of the internal control systems and compliance with policies and procedures. Internal Audit areas are planned based on inherent risk assessment, risk score, and other factors such as probability, impact, significance, and strength of the control environment. Its adequacy was assessed, and the operating effectiveness was also tested.

SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE COMPANIES

Pursuant to a fresh certificate of incorporation issued by the Registrar of Companies, Maharashtra, Mumbai, on September 13, 2022, the status of Varroc Polymers Pvt. Ltd. was changed to Varroc Polymers Ltd.

The Company has 14 subsidiaries, including step-down subsidiaries, and 3 joint venture Companies as on March 31,2023. During the year, the Board of Directors has reviewed the affairs of its material subsidiaries.

As stipulated by Regulation 33 of the Listing Regulations, the Consolidated Financial Statements have been prepared by the Company in accordance with the applicable Accounting Standards. The audited Consolidated Financial Statements, together with Auditors'' Report, form part of the Annual Report.

Pursuant to Section 129(3) of the Companies Act, 2013, the report on the performance and financial position of each of the subsidiary and joint venture companies and the salient features of their financial statements is provided in the prescribed Form AOC- 1 and forms part of the Financial Statements of the Company. Details of subsidiaries of the Company and their performance are covered in the Management Discussion and Analysis section of the Annual Report.

The details of changes in Company''s subsidiaries, joint venture or associate companies, for the FY 2022-23, are as following:

Companies which have become subsidiaries:

â¢ Varroc Germany GmBH

â¢ Varroc Poland S.p.z.oo

â¢ VL Lighting Solutions Private Limited

Companies which have ceased to be subsidiaries of the Company:

â¢ Varroc Lighting Systems SRO, Czech Republic

â¢ Varroc Lighting Systems S.de.R.L.De.C.V., Mexico

â¢ Varroc Lighting Systems Inc. USA

â¢ Varroc Lighting Systems GmBH, Germany

â¢ Varroc Lighting Systems Morocco SA

â¢ Varroc Lighting Systems s.p.z.oo, Poland

â¢ Varroc Lighting Systems Turkey EndOstriyel OrOnler imalat ve Ticaret Anonim Â§irketi

â¢ Varroc Do Brasil Industria E Comercia LTDA

â¢ VL Lighting Solutions Private Limited

Companies which have become a Joint Venture of the Company: Nil

Companies which have ceased to be a Joint Venture of the Company: Nil

Entities which have ceased to be an Associate of the Company: Nil

Entities which have become an Associate of the Company: Nil

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility (CSR) is an integral part of Varroc culture. The Company is committed to undertaking various need-based activities in compliance with Section 135 of the Act read with Schedule VII to the Act and the Company''s Corporate Social Responsibility ("CSR") Policy. The Company continued its efforts on promoting and nurturing young and emerging sports talents by providing financial assistance, which helps them get the best training and makes them competent to participate in national and international sporting events. Further, the Company has also undertaken rejuvenating the Kham River to build a sustainable environment in Aurangabad, Maharashtra.

The CSR Policy is uploaded on the Company''s website www.varroc.com. The CSR Report for the Financial Year 2022-23 is annexed to this report as Annexure-III. In terms of Section 135 of the Act read with Rule 4(5) of the Companies (Corporate Social Responsibility Policy) Rules, 2015, the Director and Group Chief Financial Officer of the Company have provided the requisite certificate that the funds disbursed by the Company to Varroc Foundation and for other CSR activities during the financial year 202223 have been utilised for the respective purposes and in the manner as approved by the Board.

During the year under review, the Company was required to spend Rs. 15.00 million on CSR activities, against which it has spent Rs. 19.42 million.

CERTIFICATES/CONFIRMATIONS/DECLARATIONS/ AFFIRMATIONS DURING THE YEAR UNDER REVIEW

â¢ There were no material changes and commitments affecting the financial position of the Company, that occurred between the end of the financial year of the Company to which the financial statements relate, viz., March 31,2023, and the date of this Report.

â¢ 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 the future.

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

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

â¢ The Certificate duly signed by the Chairman & Managing Director and Chief Financial Officer on the Financial Statements of the Company for the year ended March 31, 2023, as submitted to the Board of Directors at its meeting held on May 23, 2023, is annexed to this report.

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

â¢ The details of an application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year - Nil.

â¢ During FY 2022-23, Mr. Tarang Jain, Chairman & Managing Director, and Mr. Arjun Jain, Whole-Time Director, received remuneration of Rs. 32.31 million and Rs. 1 .1 1 million, respectively, from material subsidiary Varroc Polymers Ltd.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

a) TRANSFER OF UNCLAIMED DIVIDEND / DEBENTURE REDEMPTION / DEBENTURE INTEREST TO IEPF:

b) TRANSFER OF SHARES TO IEPF

As required under Section 124 of the Act, no Equity Shares, in respect of which dividends have not been claimed by the Members for seven consecutive years or more, have been transferred by the Company to the Investor Education and Protection Fund Authority (IEPF) during the Financial Year 2022-23.

ANNUAL RETURN

DISCLOSURE AS REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has a Sexual Harassment Policy in place in line with the requirements of the Sexual Harassment of Women

at Workplace (Prevention, Prohibition, and Redressal) Act, 2013. The Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contract, temporary, and trainees) are covered under this Policy.

During the year under review, the Company had arranged an online orientation programme under the POSH Act at the PAN India level in order to make the employees and the committee Members proficient to discharge their duties. The training was attended by all the Internal Committee Members & employees at PAN India. The Company has in place a module on "PREVENTION OF SEXUAL HARASSMENT IN THE WORKPLACE (POSH) at its internal platform, for sensitising the employees with the provisions under POSH.

The Policy is gender neutral. During FY 2022-23, the Committee received 2 (Two) complaints pertaining to sexual harassment. Both complaints were resolved with appropriate action. No cases of child labour, forced labour, involuntary labour, and discriminatory employment were reported during the period.

GREEN INITIATIVES

In commitment to keeping in line with the Green Initiative and going beyond it to create new green initiations, an electronic copy of the Notice of the 35th Annual General Meeting of the Company shall be sent to all Members whose email addresses are registered with the Company/ Depository Participant(s).

ACKNOWLEDGEMENTS

Mar 31, 2018

BOARDâS REPORT

Dear Shareholders,

The Directors of your Company take pleasure in presenting the Thirtieth Annual Report on the business and operations of the Company together with financial statements for the financial year ended March 31, 2018.

1. Financial results & appropriations a. Financial results

Particulars	STANDALONE		CONSOLIDATED
Particulars	Financial Year 2017-18 (In millions)	Financial Year 2016-17 (In millions)	Financial Year 2017-18 (In millions)	Financial Year 2016-17 (In millions)
Revenue from operations	20,954.75	18,120.53	1,03,784.57	96,085.40
Total Income	21,242.46	18,445.04	1,04,170.67	97,022.69
Profit before finance cost, depreciation, exceptional items and extraordinary expenses (EBITDA)	2,469.21	1,931.46	9,161.76	6,754.84
Depreciation and amortization (-)	1,016.11	962.82	3,864.65	3,370.83
Finance cost (-)	401.50	468.50	861.70	903.96
Share of Net Profit of Investment accounted for using the equity Method ( )	-	-	690.27	791.88
PROFIT BEFORE TAX	1,051.60	500.14	5,125.68	3,271.93
Current tax expense (-)	232.97	110.99	1161.10	473.42
Deferred tax (-)	120.33	-30.89	-543.19	-336.32
NET PROFIT FOR THE YEAR	698.30	420.04	4,507.77	3,134.83
Less: Profit attributable to Non-controlling interest	-	-	5.19	3.83
Profit attributable to owners of the Company	698.30	420.04	4,502.58	3,131.00
Add: Profit brought forward from last year	1,182.23	1,015.09	5,135.42	2,275.61
Add: Re-measurements of defined benefit plans, net of tax	10.82	-8.04	-4.89	-25.28
Less: Transfer to Debenture Redemption Reserve (DRR)	-	-200	-125	-200
Add: On Account of Capital Reduction	-	-	-205.95	-
Appropriation: Dividend on Equity Shares	-61.56	-40.25	-61.56	-40.25
Tax on Dividend	-11.19	-4.61	-11.19	-4.61
Balance carried forward in Balance Sheet	1,818.60	1,182.23	9,639.98	5,135.42

b. Companyâs Performance

During the financial year 2017-18, on a consolidated basis Varroc Group achieved revenue of Rs,103,784.6 million as compared to Rs,96,085.4 million in the previous year - a growth of 8 %. Profit after tax of the group for the year stood at Rs,4,507.8 million as against Rs,3,134.8 million in the previous year - a growth of 43.8%.

Revenue from operations on standalone basis increased to Rs,20,954.8 million as against Rs,18,120.5 million in the previous year - a growth of 15.6%. The profit after tax for the current year is Rs,698.3 million as against Rs,420.0 million in the previous year - a growth of 66.2%.

c. Dividend and transfer to reserve

The Board of Directors vide its circular resolution dated March 08, 2018 declared and paid Interim Dividend @ 50% (50 paise per share) on equity shares of Rs,1 for the Financial Year 2017-18.

The Board of Directors vide its resolution dated April 20, 2018 declared and paid Interim Dividend on 0.0001% Series C Compulsory Convertible Preference Shares (Series C CCPS) on fully diluted basis along with equity shares.

The total cash outflow on account of interim dividend on Equity and Preference shares was Rs,67.4 million. The Board recommends that the interim dividend, which was already declared and paid, be considered as the final dividend for the Financial Year 2017

18. The Board of Directors has considered it appropriate not to transfer any amount to the General Reserve before declaration of Dividend.

d. Credit Rating

During the year under review the credit rating of the Companyâs short term and long-term debt was maintained by ICRA at âICRA AA-(Stable)â for long term loan and âICRA A1 â for short term loan.

In May, 2018 ICRA upgraded the outlook on the ratings for the Companyâs long term borrowing to âAA-(Positive)â and maintained ratings for short term borrowings at âICRA A1 â.

e. Details of Internal Financial Controls with reference to the Financial Statements

Adequate internal control systems commensurate with the nature of the Companyâs business and size and complexity of its operations have been developed with the help of independent expert agency and the same are operating satisfactorily. Internal control systems consisting of policies and procedures are designed to ensure accuracy and completeness of the accounting records and the timely preparation of reliable financial information, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.

The internal financial control with reference to the financial statements were adequate and operating effectively as endorsed by statutory auditors in their report.

f. Details in respect of frauds reported by Auditors

During the year under review, there have not been any instances of fraud and accordingly, the Statutory Auditors have not reported any frauds either to the Audit Committee or to the Board under Section 143(12) of the Act.

. Industry Outlook and Business Overview

Details on economic outlook, industrial outlook, business overview and SWOT analysis of the company is covered in the Management Discussion and Analysis report.

i. Financial Information and Disclosures a. Report on Performance of Subsidiaries, Associates and Joint Venture Companies

Your Company has 22 subsidiaries and 4 joint ventures companies as on March 31, 2018. During the year, the Board of Directors (the Board) reviewed the affairs of material subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013 the Company has prepared consolidated financial statements of the Company and all its subsidiaries, which forms part of the Annual Report. Further, the report on the performance and financial position of each of the subsidiary and joint venture and salient features of the financial statements are provided in the prescribed Form AOC-1 and it forms part of the Financial Statements of the Company.

During the year under review, Varroc Lighting Systems SA, Morocco and Varroc Lighting Systems S.p.z.o.o., Poland were incorporated as step-down subsidiary companies under VarrocCorp Holding B.V., Nehterland, a wholly owned subsidiary of the Company with a purpose of setting up of new manufacturing facilities for automotive lighting and to provide technical support through research and development activities and engineering services.

During the year under review, the overseas wholly Owned Subsidiary VarrocCorp Holding B.V. has acquired a bare shell company âLang MEKRA Engenharia Avancada Ltda" (renamed as Varroc Do Brasil Comercio, Importapao E Exportapao De Maquinas, Equipamento E Pepas LTDA.) for setting up of manufacturing facility in Brazil for automotive lighting business to cater north American markets.

Further, the Company through its wholly owned subsidiary Varroc Polymers Pvt. Ltd. has acquired 90% stake in Bangalore based Company Team Concepts Pvt. Ltd. engaged in the business of manufacturing and supply of automotive accessories and components for 4 wheelers.

Further, the Company has partnered with DellâOrto S.p.A., Italy for equal co-ownership of IP rights of electronic fuel injection system and signed a Joint Venture Agreement for setting up 50:50 joint venture company for manufacturing and sale of electronic fuel injection system mainly for two wheelers in India.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited financial statements of each of the subsidiary will be available on website www.varrocgroup.com. These documents will also be available for inspection during business hours at the registered office of the Company. Copy of these financial statements shall be made available to any Member of the Company, on request.

Details of subsidiaries and joint ventures of the Company and their performance are covered in Management Discussion and Analysis Report forming part of this Annual Report.

b. Conversion of Company to Public Limited Company

Your Company was converted from private limited to public limited as per the resolution passed by the members of the Company, at their Extra-ordinary General Meeting (âEoGM") held on January 25, 2018 and a fresh certificate of incorporate was issued by the Registrar of Companies, Maharashtra, Mumbai on February 05, 2018. Subsequently, under the Offer for Sale through Initial Public Offer, the shares of Company were admitted for listing and trading on the National Stock Exchange of India and The BSE Limited. Consequently, the status of the Company has changed to listed company.

c. Share Capital

During the year under review, following corporate actions were executed resulting in change in authorized and paid-up share capital of the Company.

i) Scheme of Capital Reduction

As per the order passed by the National Company Law Board Tribunal (âNCLT") on November 9, 2017 approving the scheme of capital reduction under erstwhile section 100 to 104 of the Companies Act,1956 (Section 66 of the Companies Act, 2013) the issued, subscribed and paid-up capital of the Company was reduced by cancellation of 852,349 equity shares of Rs,10 each, held by Varroc Polymers Pvt. Ltd., without any payment. The said order of NCLT filed with the Registrar of Companies, Maharashtra, Mumbai was approved on January 15, 2018.

(ii) Conversion of Preference Shares

As per the terms of issue of Series B and Series C 0.0001% Compulsorily Convertible Preference Shares 8,52,349 equity share of Rs,10 each and 1,16,83,770 equity shares of Rs,1 each were allotted to Mr. Tarang Jain on February 06, 2018 and May 31, 2018 respectively.

(iii) Restructuring of Share Capital

During the year under review, the share capital of the Company was sub-divided from equity shares and preference shares of Rs,10 each into equity shares and preference shares of Rs,1 each with effect from January 25, 2018. Simultaneously, the authorized share capital of the Company was reclassified from Rs,50,00,00,000 comprising of 16,50,00,000 Equity Shares and 33,50,00,000 Preference Shares to Rs,50,00,00,000 comprising of Rs,25,00,00,000 divided into 25,00,00,000 Equity Shares of Rs,1 each and Rs,25,00,00,000 divided into 25,00,00,000 Preference Shares of Rs,1 each. The paid-up equity share capital of the Company as on March 31, 2018 was Rs,13,48,11,530.

d. Fixed Deposits

During the year under review, the Company has not accepted any deposits from the public.

e. Disclosures under Section 134(3)(1) of the Companies act, 2013 - Material Changes and Commitment

As per share purchase agreement signed on May 30, 2018 VarrocCorp Holdings BV, wholly owned subsidiary has acquired SA-BA Endustriyel Urunler imalat ve Ticaret Anonim irketi, a Turkey based company engaged in the business of manufacturing and supply of automotive lighting for four wheelers along with its wholly owned subsidiary company in Bulgaria at an aggregate consideration of Euro 43 million. The acquisition was partly funded by borrowed funds and partly by internal accruals. The closing conditions, including approval of competition commission were completed on June 30, 2018. No other material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and on the date of this report.

f. Disclosure regarding significant and material orders passed by regulators or Courts or Tribunal

During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companyâs operations in future.

g. Particulars of contracts or arrangements made with Related Parties

All related party transactions that were entered into during the financial year were on armâs length basis and in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large.

h. Particulars of Loans, Guarantees or Investments

Particulars of loans, guarantees, investments and securities provided during the financial year under review along with the purposes of such loans, guarantees and securities is given in Annexure III to this report.

i. Disclosure under Section 43(a)(ii) of The Companies Act, 2013

The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is required to be furnished.

j. Disclosure under Section 54(1)(d) of the Companies Act, 2013

The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is required to be furnished.

k. Disclosure under Section 62(1}(b) of the Companies Act, 2013

The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 is required to be furnished.

l. Disclosure under Section 67(3) of The Companies Act, 2013

During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014.

4. Disclosures related to Board, Committees, Remuneration and Policies a. Directors and Key Managerial Personnel

Mr. Tarang Jain retires by rotation and being eligible, offer himself for re-appointment. Information in respect of Mr. Tarang Jain is provided in the notice of the Annual General Meeting. On conversion of the Company from private limited to public limited, Mr. Tarang Jain and Mr. Ashwani Maheshwari were re-appointed as Managing Director and Whole-time director respectively and Mr. Vinish Kathuria was appointed as Additional Director/Independent Director w.e.f. February 06,2018 and their terms of appointment, including remuneration, were subsequently approved by special resolutions passed at the extra ordinary general meeting of the Company held on February 13, 2018. In addition, Mr. Vinish Kathuria was appointed as Additional Director/Independent Director w.e.f. February 06, 2018 by the Board of Director on February 06,2018 and later on his appointment as independent director for a term of 3 years was ratified by the members of the Company on February 13, 2018.

Appointment of Mr. T. R. Srinivasan, Group CFO and Mr. Rakesh Darji, Company Secretary as key managerial personnel of the Company as required under Section 203 of the Companies Act, 2013 was confirmed at the Board meeting held on February 06, 2018. Mr. Tarang Jain, Mr. Ashwani Maheshwari and Mr. Arjun Jain by virtue of their position will also be considered as key management personnel.

Mr. Arjun Jain had stepped down as director of the Company on February 06, 2018. He has been re-inducted to the Board as Additional Director/Whole-time Director by the Board on August 08, 2018. The Company has sought approval of the members by way of special resolution for his appointment as Whole-time Director and terms and conditions of remuneration payable to him. Mr. Padmanabh Sinha (DIN 00101379), Investor Nominee Director has resigned w.e.f. May 28, 2018. The Board places on record its sincere appreciation for the services rendered and guidance provided to the management of the Company during his tenure.

In accordance with the amended requirement of Regulation 17(1A) of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015 which shall come into force with effect from April 1, 2019, Mr. Naresh Chandra (DIN 00027696) who has attained the age of eighty-three years consent of the members of the Company by way of special resolution is sought at the ensuing annual general meeting for Mr. Naresh Chandra to continue after April 1, 2019 as Non-Executive Director and Chairman of the Company.

Details of Board Meetings and Committee meetings held during the year under review attendance at the meetings are provided in Corporate Governance Report.

b. Declaration by Independent Directors

In terms of Section 149(7) of the Act, the Independent Directors have submitted their declaration confirming compliance with the criteria of independence as stipulated under Section 149(6) of the Act.

c. Information on Board Meeting procedure and attendance during the Financial Year 2017-18

The Board meetings of the Company are conducted as per the provisions of the Companies Act,2013 and applicable Secretarial Standards. Information as mentioned in the Act and all other material information, as may be decided by the management, are placed for consideration of the Board. Details on the matters to be discussed along with relevant supporting documents, data and other information is also furnished in the form of detailed agenda to the Board and the Committees concerned, to enable directors take critical decisions and accordingly advise the management.

Details regarding information furnished to the Board members, number of Committee and Board meetings held during the year along with attendance record of each director has been disclosed in the Corporate Governance Report of the Company.

d. Directorâs Remuneration Policy and Criteria for Matters under Section 178 and Payment of Commission

As stipulated under Section 178 of the Act, the Board has approved a Nomination and Remuneration Policy of the Company. The Policy documents the mechanism for appointment, cessation, evaluation and remuneration of the Directors, Key Managerial

Personnel and Senior Management of the Company. Information on the Policy and details of the criteria for determining qualifications, positive attributes and other matters in terms of Section 178 of the Act are provided in the Corporate Governance Report.

The Company has not paid any Commission to Managerial Personnel during the financial year under review. The Company has paid in aggregate profit related commission of Rs,1.05 crore to non-executive directors for the financial year 2017-18 which is within 1% of profit approved by the shareholders and details of the same are provided in Corporate Governance Report.

e. Formal annual evaluation of the performance of the Board, its Committees and Directors

This being the first financial year after Company becoming public and listed company, formal annual evaluation of performance of the board and its committees and directors will be conducted at the end of financial year 2018-19.

f. Directorsâ Responsibility Statement

Pursuant to Section 134(5) of the Act, the Directors, based on the representation received from the management, confirm that:

(i) in the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year 2017-18 and of the profit and loss of the Company for that period;

(iii) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

(v) the directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and

(vi) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

g. Corporate Governance

Corporate Governance Report along with General Shareholder Information and Management Discussion and Analysis are included in this Annual Report

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

h. Corporate Social Responsibility and CSR Policy

Corporate Social Responsibility is an integral part of the Companyâs ethos and policy and it has been pursuing this on a sustained basis. In this endeavor, the Company has contributed funds for the CSR activities/project related to promoting rural and nationally recognized sports, promotion of education and employment enhancing vocational skills, environment sustainability and promoting art and culture. During the year under review the Company was required to spent '' 9 million towards CSR activities against which, the Company has spent Rs,18.6 million. The Annual Report on CSR activities as required to be given under Section 135 of the Companies Act, 2013 and Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been provided in an Annexure - I to this Report.

i. Enterprise Risk Management Policy

The Board of Directors has approved and adopted comprehensive Enterprise Risk Management Policy (ERM) for the Company. The Enterprise Risk Management Policy is designed to manage risk within the risk threshold established by the Board and provide reasonable assurance over the achievement of strategic and operational objectives. The policy document covers the enterprise wide risk management aspects of all Business Units/Plants of the Company. The Policy will help in risk identification, risk measurement, define risk appetite and threshold limits and suggesting risk mitigation measures. The Company has with the professional help implemented ERM Policy by carrying out detailed risk identification, assessment and ranking in consultation with senior management of the Company. The process is ongoing and require continuous exercise across all locations and functions of the Company. As a part of risk mitigation measure, the Company has implemented Compliance Management Tool across all business units and functions to monitor compliance of all applicable laws in India. The Audit Committee will do the periodic review of implementation, assessment and mitigation measures under ERM. The Chief Internal Auditor has been appointed as Chief Risk Officer to monitor on-going basis risk and to suggest mitigation measures.

5 Auditors a. Statutory Auditor

M/s. Price Waterhouse & Co., Chartered Accountants, LLP, (Firmâs Registration No.304026E/E-300009) (âPWC"), hold office up to the conclusion of the Thirtieth Annual General Meeting (âAGMâ).

PWC were appointed as Statutory Auditors of the Company from the conclusion of twentieth annual general meeting (AGM) i.e. from 29th September, 2008 and thereafter they have been re-appointed every year. In terms of Section 139 of the Act read with Rule 6 of the Companies (Audit and Auditors) Rules, 2014, the term of appointment of PWC as Statutory Auditors of the Company expires at the ensuing AGM and rotation of statutory auditor is due at AGM.

In view of the foregoing, the Board has recommended for approval of the shareholders appointment and fix remuneration of M/s. S R B C & CO. LLP, Chartered Accountants (Firm Registration No: 324982E/E300003), as Statutory Auditors of the Company for a term of five years, from the conclusion of thirtieth AGM till the conclusion of thirty fifth AGM.

b. Cost Auditor

As per the provisions of Section 148 of the Act and Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 (âthe Rules"), the Company is required to maintain cost records with respect to certain products of the Company and get the same audited.

Based on the recommendation of the Audit Committee, the Board, at its meeting held on August 07, 2018, has appointed M/s S. R. Bhargave & Co., Cost Accountants as Cost Auditor of the Company for the financial year 2018-19 at a remuneration of Rs,3,00,000 (Three Lakhs only). The said fee is exclusive of applicable taxes and reimbursement of out-of-pocket expenses, which shall be payable at actuals. A proposal for ratification of the cost audit fee for the audit of cost records for the financial year 2018-19 has been proposed at the forthcoming Annual General Meeting. The Cost Audit Report for the financial year 2017-18 will be filed within the stipulated period of 30 days after it is submitted by the Cost Auditors.

c. Secretarial Auditor

In terms of the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s Uma Lodha & Co. (C.P. No.2593), Company Secretary in Practice, Mumbai was appointed by the Board as Secretarial Auditor to undertake the Secretarial Audit for the financial year 2017-18.

The Secretarial Audit Report for the financial year 2017-18 is annexed herewith as Annexure- II to this report. The report does not contain any qualification, reservation or adverse remark.

6. Initial Public Offer

The Company came out with its maiden Initial Public Offer (âIPO") by way of Offer for Sale (âOFS") under which 2,02,1 1,730 equity shares of '' 1 were offered to the public for subscription by promoter Mr. Tarang Jain (1,752,560 equity shares) and private equity investor Omega TC holdings Pte. Ltd. (16,917,130 equity shares) and Tata Capital Financial Services Limited (1,552,040 equity shares) at a price band of '' 965 to '' 967. The IPO of the Company was subscribed 3.6 times and the equity shares of the Company were listed on National Stock Exchange of India Limited and BSE Limited on 06th July 2018. Post IPO, 15 % of the shareholding is held by public and balance 85 % is held by the Promoter and Promoter group.

As the Companyâs IPO was by way of OFS by shareholders, the Company did not receive any proceeds from the IPO and entire IPO proceeds were paid to the selling shareholders.

7. Other Disclosures and Statutory Information

a. Adoption of new set of Articles of Association

Consequent upon conversion of status of the Company to âpublic companyâ and in order to fulfil the listing requirements, the Company has adopted new set of Articles of Association of the Company with effect from March 25, 2018

b. Policies and code adopted by the Company

The Board of Directors has from time to time framed and approved policies as required by the Listing Regulations as well as under the Companies Act, 2013. These policies will be reviewed by the Board at periodic intervals. Some of the key policies that have been adopted are as follows:

(i) Nomination and Remuneration Policy; (ii) Material Subsidiary Policy (iii) Policy for determination of materiality threshold (iv) Code for Disclosure of Unpublished Price Sensitive Information (v) Code of Conduct for Insider Trading (vi) Policy on Preservation of Information and Archival of documents (vii) Policy on Related Party Transactions (viii) Code of Conduct for Directors (ix) Enterprise Risk Management Policy (x) Whistle Blower Policy.

The above policies are available on the Companyâs website on the link www.varrocgroup.com/ investor/ investor-relations.

c. Disclosure under code of conduct for Prevention of Insider Trading and Fair Disclosure of Unpublished Price Sensitive Information

In terms of the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has adopted a âCode of Conduct for Prevention of Insider Tradingâ (âPIT Code"). Further, the Company has also adopted a âCode of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Informationâ (âUPSI Code"). The required details have been disclosed in the Corporate Governance Report of the Company.

d. Particulars of employees and related disclosures

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

A statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as separate annexure forming part of this Report. In terms of Section 136 of the Act, the Annual Report and financial statements are being sent to the Members excluding the aforesaid annexure. The said annexure is available for inspection at the registered and corporate office of the Company during business hours and will be made available to any shareholder, on request.

e. Conservation of Energy, Technology absorption, Foreign exchange earnings and Outgo

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are provided in Annexure - IV to this report.

f. Extract of Annual Return

As required under section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014 (as amended), an extract of annual return in Form MGT - 9 is available on companyâs website on the link www. varrocgroup.com/ investors/ investor-relations/annual return.

g. Occupational Health & Safety

The organization believes in âZero Harmâ. The aim is to improve health and safety standards of people who are working with the organization in their capacity as employees, contractors or in any other role. Efforts are taken to minimize activities which may affect the health and safety in working place. Steps are taken for optimum utilization of plants, with least disposal of harmful gases in environment.

h. Disclosure as required under sexual harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013

Your Company is committed towards providing a healthy environment and thus does not tolerate any discrimination and/or harassment in any form. The Company has in place an Internal Complaints Committee to inter-alia Prevent sexual harassment at the workplace and Redress the complaints in this regard. During the year under review, the Company has not received any complaint.

8. Acknowledgements

Your Directors place on record their acknowledgement for the co-operation received from the Customers, Vendors, Bankers, Associates, Collaborators and the Employees of the Company without which it would not have been possible for the Company to achieve such performance and growth.

for and on behalf of the board of directors

For Varroc Engineering Limited

Naresh Chandra

Place : Mumbai Chairman

Date : August 07, 2018 DIN : 00027696

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