centum electronics ltd Directors report

Dear Members,

We have pleasure in presenting the Thirtieth Annual Report on the Business and Operations of the Company together with the Audited Statement of Accounts for the Financial Year ended March 31, 2023.

1. Financial Highlights:

A summary of the Standalone and Consolidated Financial Performance of your Company, for the financial year ended March 31, 2023, is as under: ( in Millions)

	Consolidated		Standalone
Particulars	2022-23	2021-22	2022-23	2021-22
Total Income	9,288	7,880	5,052	3,538
Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA)*	762	742	537	425
Depreciation	438	432	162	165
Interest	273	263	157	146
Profit Before Tax**	109	127	264	172
Profit After Tax***	67	(535)	194	118

* Excludes other income and finance income and exceptional item

^** Excludes exceptional item & share of profit/loss from associate ^*** includes exceptional item & share of profit/loss from associates

The financials of the Company are prepared under Ind AS in pursuance of Section 133 of the Companies Act, 2013 and in compliance with the (Indian Accounting Standards) Rules, 2015.

2. Business Performance:

During the current year of operations, your Company has registered a consolidated total income of H 9,288 million compared to previous financial year total income of H 7,880 million. Your Company has earned a Profit Before Tax of H 109 million.

At standalone level, total income was H 5,052 million compared to previous financial year total income of H 3,538 million. Further, your Company has earned a net profit before tax of H 264 million.

3. Subsidiaries: a. Centum Electronics UK Limited

During the year, Centum Electronics UK Limited, a wholly owned subsidiary company, has registered total income of H 1.88 million and incurred a net loss after tax of H 0.11 million.

b. Centum T&S Private Limited (Formerly, Centum Adeneo India Private Limited)

During the year, Centum T&S Private Limited, a wholly owned subsidiary company, has registered total income of H 382 million and earned a net profit after tax of H 18 million for the year.

c. Centum Adetel Group SA.

During the year, Centum Adetel Group SA. the subsidiary company has registered total income of H 4,218 million and incurred a net loss of H 97 million. During the financial year, your Board of Directors had reviewed the affairs of the subsidiaries. The consolidated financial statements of your Company are prepared in accordance with Section 129(3) of the Companies Act, 2013; and forms part of this Annual Report.

A statement containing the salient features of the financial statements of the subsidiaries, in the prescribed format AOC-1, is appended as "Annexure-1" to the Boards Report.

The statement also provides the details of performance and financial position of each of the subsidiaries. The separate audited financial statements in respect of the subsidiary companies are available on the website of your Company at www.centumelectronics.com

4. Consolidated Financial Statements:

The Consolidated Financial statements have been prepared by the Company in accordance with the applicable Indian Accounting Standards (‘Ind AS) and the same together with the Auditors Report thereon is provided in the Annual Report.

The Financial Statements of the subsidiaries and related detailed information will be kept at the Registered Office of the Company and will be available to investors seeking information on all working days during office hours.

The Company has adopted a Policy for determining Material Subsidiaries in terms of Regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy, as approved by the Board, is available on the Investor page at Companys website www. centumelectronics.com.

5. Dividend:

Your Directors are pleased to recommend a Dividend of H 4 per equity share (40%) having face value of H 10 per equity share for the financial year ended March 31, 2023. The final dividend recommended is subject to approval of the Shareholders in the ensuing Annual General Meeting of the Company. The policy on Dividend Distribution is available on the Companys website at www.centumelectronics.com The total dividend payout will be H 51.54 million for the financial year 2022-23 for 1,28,84,781 number of fully paid up equity shares of H 10 each.

6. Material changes and commitments, if any, affecting the financial position of the company, having occurred since the end of the Year and till the date of the Report:

There have been no material changes and commitments, which affect the financial position of the Company which have occurred between the end of the financial year to which the financial statements relate and the date of this Report.

7. Change in nature of Business, if any:

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

8. Reserves & Surplus:

The Board of Directors have decided to retain the entire amount of profit under Retained Earnings. Accordingly, your Company has not transferred any amount to General Reserves for the year ended March 31, 2023.

9. Share Capital:

During the year, there was no change in the share capital of the Company. As on March 31, 2023 the Authorised Share Capital of the Company was H 15,50,00,000/- divided into

1,55,00,000 equity shares of H10/- each and Paid-up equity share capital of the Company is H 12,88,47,810/- divided into 1,28,84,781 equity shares of H 10/- each.

10. Debentures: Issue of Shares or Other Convertible Securities:

During the year under review, the Company has not issued any Debentures or any other convertible securities. As on date, the Company does not have any outstanding Debentures.

11. Depository System:

Your Companys equity shares are tradable only in electronic form. As on March 31, 2023, 99.30% of the Companys total paid up equity share capital representing 1,27,94,412 shares are in dematerialised form.

12. Transfer to Investor Education and Protection Fund:

Pursuant to the applicable provisions of the Companies Act, 2013 ("the Act") read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government, after completion of seven years. Further, according to the Rules, the shares in respect of which dividend has not been paid or claimed by the Members for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority.

The Company had sent individual notices and also advertised in the newspapers seeking action from the Members who have not claimed their dividends for earlier years mentioning the consequential impact for not claiming for seven consecutive years or more. During the year, the Company transferred H 4,47,756/- to

IEPF, (the amount in unpaid Final Dividend Account opened in 2014-15 and the amount in unpaid 1st Interim Dividend Account opened in 2015-16) which was due & payable and remained unclaimed & unpaid for a period of seven years as provided under Section 124(5) of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Auditing, Transfer and Refund) Rules, 2016. The Company, pursuant to the circulars issued by the Ministry of Corporate Affairs under the aforesaid rules mandated the transfer of shares on which dividend has not been paid or claimed by the Shareholders for seven consecutive years or more to the demat account of the IEPF Authority. The Company has accordingly transferred 9,284 shares to the demat account of the IEPF Authority. Members / claimants whose shares, unclaimed dividend, have been transferred to the IEPF Authority Demat Account as the case may be, may claim the shares or apply for refund by making an application to the IEPF Authority in Form IEPF-5 (available on http:www.iepf.gov.in) along with requisite fee as decided by IEPF Authority from time to time.

13. Internal Control Systems and their adequacy:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Company has appointed M/s. KPMG, Chartered Accountants, as its Internal Auditor. The Audit Committee defines the scope and areas of Internal Audit. The Internal Auditor audits the areas recommended by the Committee every year. The Audit observations and corrective actions thereon are being presented to the Audit Committee of the Board. Based on the report of Internal auditor, process owners undertake corrective action in their respective areas and thereby strengthen the controls. During the year, the Internal Audit was done on the areas recommended and no material weakness was observed.

Additionally, the company, also has an in-house Internal Auditor to check the controls and strengthen the systems and processes.

14. Directors and Key Managerial Personnel:

The Board of Directors of the Company as on March 31, 2023 comprised of 8 Directors out of which 2 are Executive Directors, 1 Non - Executive Director and 5 are Non-Executive Independent Directors. The composition of the Board of Directors of the Company is in accordance with the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with an appropriate combination of Executive, Non-Executive and Independent Directors.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 Mr. Nikhil Mallavarapu (DIN: 00288551) will retire by rotation at the Thirtieth (30th) Annual General Meeting and being eligible, has offered himself for re-appointment. Dr. Swarnalatha Mallavarapu (DIN: 00288771), Non-Executive Non-Independent Director through a letter dated 27th May, 2023, submitted her resignation from the Directorship of the Company. The Board noted and accepted the resignation of Dr. Swarnalatha Mallavarapu and thanked for her contribution to the Company and wished her the best for future endeavors. The Board, based on the recommendations of the Nomination and Remuneration Committee Meeting held on 27th May, 2023, approved the appointment of Ms. Tanya Mallavarapu (DIN: 01728446) as Additional Director with immediate effect subject to the approval of shareholders of the Company. Ms. Tanya Mallavarapu is the daughter of Mr. Apparao V Mallavarapu and Dr. Swarnalatha Mallavarapu. Ms. Tanya Mallavarapu is the sister of Mr. Nikhil Mallavarapu.

None of the Directors of the Company are disqualified under Section 164(2) of the Companies Act, 2013.

In compliance with Section 203 of the Companies Act, 2013, Mr. Apparao V Mallavarapu, Chairman & Managing Director, Mr. K S Desikan, Chief Financial Officer and Ms. Indu H S, Company Secretary & Compliance Officer are the Key Managerial Personnel in accordance with the provisions of Section 203 of the Companies Act, 2013.

a. Board Meetings:

The Board of Directors duly met four (4) times in respect of which proper notices were given and the proceedings were properly recorded and signed in accordance with the provisions of the Companies Act, 2013 and rules made thereunder. The details of which are given in the Corporate Governance Report.

b. Declaration by Independent Directors:

The Company has received necessary declaration from each of the Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Status on Independent Directors proficiency test: The Independent Directors on the Board of the Company have the integrity, expertise & experience and the said Directors have either cleared the proficiency self-assessment test conducted by the Institute of Corporate Affairs notified under sub-section (1) of section 150 of the Companies Act, 2013 or were exempted from appearing for the proficiency self-assessment test.

c. Remuneration Policy:

The Board has, upon recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior

Management and their remuneration as required under Section 178(3) of the Companies Act, 2013. The Policy is available on the Companys website https://www. centumelectronics.com/investor-relations/. There has been no change in the Policy since the last financial year.

d. Annual evaluation of Board, its Committees and Individual Directors:

The Board of Directors has carried out an annual evaluation of its own performance, its Committees and individual Directors pursuant to the requirements of Section 134(3)(p) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Further, Independent Directors have reviewed the performance of the Board, its Chairman and Non-Executive Directors and other items as stipulated under Schedule IV of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 at their separate meeting held on 19 January, 2023.

e. Committees of the Board:

Details with respect to the Audit Committee, the Nomination and Remuneration Committee, the Stakeholders Relationship Committee, Risk Management Committee and Corporate Social Responsibility Committee and meetings of the said Committees held during the year forms part of the Corporate Governance Report annexed to this Report.

f. Risk Management:

The Company follows well–established and detailed risk assessment and minimization procedures, which are periodically reviewed by the Board. The Company has in place a business risk management framework for identifying risks and opportunities that may have a bearing on the organizations objectives, assessing them in terms of likelihood and magnitude of impact and determining a response strategy. The details on composition and meetings of the Committee forms part of the Corporate Governance Report annexed to this report.

15. Directors Responsibility Statement:

Pursuant to Section 134(3)(c) of the Companies Act, 2013, your Directors confirm: i. that in the preparation of annual accounts for the year ended March 31, 2023, the applicable Accounting Standards have been followed along with the proper explanations relating to material departures; ii. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been adopted and applied 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 profit of the Company for year ended on that date; iii. that 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; iv. that the annual financial statements have been prepared on a going concern basis; v. that proper internal financial controls were in place and that the financial controls were adequate and operating effectively; vi. that systems to ensure compliance with the provisions of all applicable laws were in place, were adequate and operating effectively.

Further, the Board of Directors confirm that the Company has complied with the Secretarial Standards on the Board and General Meetings issued by the Institute of Company Secretaries of India, as applicable to the Company, during the financial year ended March 31, 2023.

16. Particulars of Loans, Guarantees or Investments:

The particulars of loans given, investments made, securities provided and guarantees given as required under Section 186 of the Companies Act, 2013 are provided in note 5, 6 and 45(c)(i) forming part of the standalone financial statements.

17. Contracts and Arrangements with Related Parties:

All related party transactions that were entered into during the financial year were in the ordinary course of business and were at arms length basis. There were no material significant related party transactions made by the Company during the year with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All the related party transactions were placed before the Audit Committee and also the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of foreseen and repetitive nature in terms of Regulation 23(3)(a) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 The Company has framed a policy on dealing with the related party transactions and the same is available on the Companys website https://www.centumelectronics.com/ investor-relations.

Your Directors draw attention of the members to Note no. 42 to standalone financial statements which sets out the related party disclosures.

18. Auditors: a. Statutory Auditors

The Members at the Twenty Ninth Annual General Meeting of the Company held on August 12, 2022, approved the appointment of M/s. S.R Batliboi & Associates LLP, Chartered Accountants (Firm registration number: 101049W/E300004) for second term of five years as Statutory Auditors of the Company to hold office from the conclusion of 29th Annual General Meeting till the conclusion of the 34th Annual General Meeting.

The Report of the Statutory Auditors for the financial year 2022-23 does not contain any qualification on the financial statements of the Company.

The details of remuneration of the Statutory Auditors with break-up of fee paid as required by the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the financial year 2022-23 is given as part of the Corporate Governance Report.

b. Secretarial Audit

In terms of Section 204(1) of the Companies Act, 2013, the Board had appointed Ms. Aarthi G Krishna, Practicing Company Secretary (CP No.5645), to conduct Secretarial Audit for the financial year 2022-23. The Secretarial Audit Report for the financial year ended March 31, 2023 is enclosed as "Annexure-2" to this Report. The said Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer made by the Secretarial Auditor.

c. Cost Auditors

As required under Section 148 of the Companies Act, 2013 the Board of Directors of the Company has appointed M/s. K.S. Kamalakara & Co., Cost Accountants (Firm Registration No. 000296) as Cost Auditors of the Company for the financial year 2023-24 at a fee of H1,00,000/- plus applicable taxes and out of pocket expenses. The ratification of remuneration payable to Cost Auditors is placed as an agenda item for approval of shareholders at the ensuing annual general meeting.

19. Corporate Governance:

Your Company believes in adopting best practices of Corporate Governance. A report on Corporate Governance as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is forming part of this Annual Report as "Annexure – 6".

A certificate from the Practicing Company Secretary of the Company regarding compliance of the conditions stipulated for Corporate Governance as required under Clause E of Schedule V read with Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to this report. The declaration by the Managing Director addressed to the Members of the Company pursuant to Clause D of Schedule V Read with Regulation 34 (3), Chapter IV of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 regarding adherence to the Code of Conduct by the Members of the Board and by the Members of the Senior Management Personnel of the Company is also attached to this Report.

20. Conservation of Energy, Technology absorption, Research & Development and Foreign Exchange Earnings and Outgo:

The particulars prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, are enclosed as "Annexure-3" to this Report.

21. Corporate Social Responsibility:

As part of the Companys initiatives under "Corporate Social Responsibility (CSR)", the Company has funded several projects that aid and improve education, literacy and healthcare for children. It has also funded and participated in projects that support and aid children with disabilities. The disclosures as required under Section 135 of the Companies Act, 2013 read with Rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as "Annexure-4" to this Report.

22. Details of establishment of Vigil Mechanism:

In accordance with Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has established a Vigil Mechanism and has a Whistle Blower Policy. The Policy is available at the Companys website https://www.centumelectronics.com/investor-relations. The Company did not receive any complaints during the year under review.

23. Particulars of Employees:

The information relating to remuneration and other details as required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is enclosed as "Annexure-5" to this report. Further, the details of employees who are in receipt of remuneration exceeding the limits prescribed under Section 134 of the Companies Act, 2013 read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. In terms of Section 136(1) of the Companies Act, 2013 and the Rules made thereunder, the Annual Report is being sent to the Shareholders and others entitled thereto excluding the information on employees particulars. The same is available for inspection by the Shareholders at the Registered Office of the Company during business hours on working days of the Company up to the date of ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

24. Prevention, Prohibition and Redressal of Sexual Harassment at workplace:

The Company has zero tolerance for sexual harassment at workplace and has formulated a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee, to inquire into complaints of sexual harassment and recommend appropriate action. All the employees of the Company as a part of induction are sensitized about the provisions of the said Act. The Company has not received any complaint of sexual harassment during the financial year 2022-23.

25. Annual Return:

In accordance with the Companies Act, 2013, the annual return in the prescribed format is available at https://www. centumelectronics.com/annual-return/.

26. Management Discussion and Analysis Report:

The Management Discussion and Analysis Report for the year under review, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is forming part of the Annual Report.

27. Business Responsibility and Sustainability Report:

As required under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility and Sustainability Report is provided in a separate section and forms part of the Annual Report as "Annexure – 7".

28. Employee Stock Option Plan:

As a measure of rewarding the employees, your Company had introduced an Employee Stock Option Plan (ESOP) during the year 2013.

Further, "Centum Electronics Limited - Restricted Stock Unit Plan 2021" scheme was approved by the Shareholders of the Company through the ‘Postal Ballot process on October 5, 2021. BSE Limited and the National Stock Exchange of India vide their letters dated October 28, 2021 and October 12, 2021 respectively have accorded their in-principle approval for listing up to a maximum of 1,75,000 Restricted Stock Units under the scheme.

The certificate from the Secretarial Auditor on the implementation of ESOP 2013 and RSU 2021 in accordance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 has been uploaded on the website of the Company at www.centumelectronics.com. The particulars prescribed under Regulation 14 read with Part F of Schedule I of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 has been uploaded on the website of the Company at www.centumelectronics.com.

29. Awards and Recognitions:

The Company is proud recipient of :

- SEEM (Society of Energy Engineers & Managers) Silver Award for its energy conservation measures.

- ‘Deliver Innovation Solutions award from DANA.

- ‘Localization Award for Electronics Relay modules by ABB at their Supplier Meet - 2022.

30. General:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions with regard to the following during the year under review: a. Details relating to deposits covered under Chapter V of the Companies Act, 2013 b. Issue of equity shares with differential rights as to dividend, voting or otherwise. c. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this report d. There is no remuneration received by the Managing Director/Whole Time Director from the subsidiary company. e. No significant or material orders were passed by the regulators or courts or tribunals which impact the going concern status and the Companys operations in future. f. No application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016. g. No frauds are reported by Auditors under sub-section (12) of Section 143.

31. Acknowledgements:

Your Directors thank the customers for their continued patronage and the investors, bankers and vendors for their continued support.

Your Directors acknowledge and thank the invaluable contributions of all the employees, who have demonstrated their skill, teamwork and commitment through their competence, hard work, cooperation and support.

Your Directors would also like to place on record the support received from, the Electronic Hardware Technology Park, the Customs and GST Departments, the Reserve Bank of India, the Department of Industries and Commerce, Karnataka, the Karnataka Udyog Mitra and all the other Central and State Governmental agencies.

By order of the Board For Centum Electronics Limited

Place: Bengaluru	Apparao V Mallavarapu	Nikhil Mallavarapu
Date: May 27, 2023	Chairman & Managing Director	Wholetime Director
	DIN: 00286308	DIN: 00288551