castex technologies ltd Management discussions

1. GLOBAL ECONOMIC OVERVIEW

The year 2020 has been an unprecedented year. Covid-19 struck the global economy inflicting high and rising human cost worldwide. Governments and central banks across the world stepped in with fiscal and monetary support and global economic recovery from the depths of the Covid-19 plunge has proceeded significantly faster than what most envisioned.

The year 2020 started on a positive note with expectations of improving growth in the automotive and industrial sectors. The rapid spread of Covid-19 forced governments to implement stringent lockdowns. Though lockdowns were inevitable to protect the well-being of citizens, they brought the world economy to a physical standstill. The pandemic has deeply impacted manufacturing capacities, and even as we speak, there are several countries, including India, in the middle of deadlier second or third waves of the infection, which further makes us unable to resume normal life and work. Furthermore, unemployment figures are worrisome as the vulnerable sections of the society and professionals from informal and contact-intensive sectors, such as tourism, are impacted the most.

In all, the global economy is estimated to have contracted 4.3% in 2020, a 0.9% smaller collapse than was expected in June forecasts. In advanced economies, the initial contraction was less severe than anticipated, but, the ensuing recovery has been dampened by a substantial resurgence of Covid-19 cases. Advanced market economies, which were witnessing a low single-digit growth rate even before the pandemic, are expected to make a slower recovery as compared to the emerging economies. Aggregate GDP in emerging market and developing economies is expected to grow 5% in 2020, after a contraction of 2.6% in 2020, though there would likely be a high divergence in the economic output of individual countries. Meanwhile, output in China is estimated to have rebounded last year at a faster-than-expected rate, with particular support from infrastructure spending. Chinas strength was an exception however, and disruptions from the pandemic in the majority of other Emerging Markets and Developing Economies (EMDEs) were more severe than previously envisioned, resulting in deeper recessions and slower recoveries.

For the Indian automotive industry, which accounts for nearly half of the manufacturing GDP of the country, the year 2020-21 was an exceptional one for the wrong reasons. The industry was replete with and staring at a series of problems, one bigger than the other, that affected production, productivity and sales. Even as the year started in the backdrop of a very long slowdown still looming large, the industry was a witness to a further list of bigger problems like economic uncertainty, transition to BS-VI, the pandemic and the resultant lockdown, constraints in supply chain and the migration of labour.

As per the Society of Indian Automobile Manufacturers (SIAM), the apex automobile body in the country, all segments of the Indian auto sector witnessed a de-growth in sales during 2020-21 with passenger vehicles (PVs) witnessing a CAGR of -6.2%, commercial vehicles (CVs) at -12.8%, three wheelers (3Ws) at -30.2% and two-wheelers (2Ws) at - 9.2%.

As the country is still trying its best to navigate through this unparalleled crisis, the Government and the Reserve Bank of India are taking well calibrated measures to support a robust economic recovery.

The Union Budget 2021 was one good example of the initiatives of the Government in focusing on regaining the growth momentum in the economy through several measures including keeping the tax rates stable and enhancing investments in infrastructure.

2. INDIAN ECONOMIC OVERVIEW

India was one of the worst hit economies between April - June 2020 quarter with GDP growth contracting by 23.9% primarily driven by the rigorous nature of our lockdown. That said, our economy came back strongly and while FY 20-21 will still be a contraction of ~7.3%, the pace of contraction is much lower contrary to most expectations.

India was amongst the few countries that went into nationwide lockdown post the pandemic, and after that, the economy unlocked in phases. Overall economic slowdown, led by COVID-19 onstage followed by stringent lockdowns severely impacted economic activity, bringing manufacturing and trading activities to a grinding halt. Mobility restrictions and

social distancing led to unprecedented supply chain and manufacturing disruptions and weakened investment and consumption demand. As estimated by IMF, Indias Gross Domestic Product (GDP) contracted by 8.0% in FY 2021 visa-vis 4.2% growth recorded in FY 2020.

Notable initiatives such as special package under ‘Atmanirbhar Bharat; liquidity support for banks and financial institutions; liberalization of Foreign Direct Investment (FDI) norms; creation of National Infrastructure Pipeline (NIP); Production-Linked Incentive (PLI) scheme to boost domestic manufacturing - are all expected to reinvigorate the economy. Supported by strong fiscal and quasi-fiscal measures along with mass vaccination drives, Indias growth is likely to rebound to 12.5% in FY 2022 and 6.9% in FY 2023. With this, India will leave China behind and become the fastest-growing economy in the world. However, the second wave of coronavirus infections, trajectory of vaccination drive and its impact on contact intensive sectors may pose challenges for the economy.

(Source: IMF World Economic Outlook, April 2021)

India is not yet out of the shadow of the pandemic, whose resurgence from late March 2021 has raised serious concerns about the economys recovery. The first wave of COVID-19 in India ravaged the economy, but the shock was absorbed to a great extent by relief measures announced by the government and the RBI. This time, however, the relief measures may not be so broad-based. Government revenues are already strained after last years generous efforts, while banks are in a much weaker position to extend financial help to borrowers. Therefore, relief measures may not be enough to support the economy if the pandemic deepens and continues for a longer period in the current financial year.

3. GLOBAL A UTOMOBILEIND USTR Y

The global automotive industry grappled with multiple issues during the year. On one hand, the sector saw greater clarity emerge on Brexit; yet on the other hand, mounting trade tensions, muted global growth and enhanced regulatory norms fundamentally changed the contours of the business environment. The onslaught of the COVID-19 pandemic saw automakers suffer a difficult first half of 2020 with sales plummeting in most markets, slightly lifted by a buoyant second half. Global shutdowns halted productions and supply chains were disrupted.

Following a decline from 2018 to 2020, the global auto sector underwent stagnation during the first wave of Covid-19. However, as global demand showed signs of recovery, the growth returned in year 2020. This being said, the pace of recovery has been uneven, with China leading the demand charts, and North America and Europe following.

The demand in year 2020 is estimated to grow at +10.1% YoY with solid recoveries in the US and China region, while maintaining a cautious stance on Europe, followed by +5.5% YoY and +3.0% YoY in CY 2022 and CY 2023 respectively.

The global auto sales will expand by 8-10% in 2021 to 83 million-85 million units, up from 77 million in CY 2020. The market share of electric vehicles (including plug-in hybrids) is expected to increase in CY 2021 to a 6-8%, after comprising a 4.4% share in CY 2020 and 2.5% in CY 2019. The European market will drive this growth.

Meanwhile auto electrification, which has entered a full expansion phase, is poised to grow, following a stricter environmental regulation. A number of countries have come forward to promote EV (electrified vehicle) sales as part of their environment-conscious policies. EV sales have significantly outpaced auto demand in core markets since mid-2020. This is an initial point of escalation for the trend in auto electrification despite lingering impact from COVID-19.

This mega-trend will set winners apart from the losers as this relates directly to the monetisation of EVs and changing competitive dynamics within the supply chain.

4. INDIAN AUTOMOBILE INDUSTRY

The Indian automotive industry is the pillar of the manufacturing sector and provides employment to a large pool of people. Being the fourth largest automotive market globally, the sector plays a vital role in Indias aspiration to become a USD 5 Trillion economy. Increasing urbanization, large working-age population, rising incomes and strong impetus on infrastructure and construction sectors have been driving the industrys growth over the years.

FY 2021 has been one of the toughest years in the history of the automotive industry with the COVID-19 pandemic

putting brakes on the growth of the industry. Already battered by a prolonged slowdown before the coronavirus pandemic due to factors such as regulatory changes and migration to BS VI emission norms, liquidity constraints, and weaker demand environment, the sector was brought to a standstill due to the nationwide lockdown and restrictions enforced to curtail the spread of the virus.

The declining trend in underlying demand was underway even before the COVID-19 pandemic. Over the period FY 2018 to FY 2021, production volumes for MHCV & PV segment have declined by 47% and 24%, respectively.

In December 2020, sales of Passenger Vehicles (PVs) and two-wheelers witnessed a resurgence of growth. This again can be traced back to months of restrictions and low buying activities, which are normally retriggered in the festive season. The rising focus on maintaining social distancing (by travelling in personal vehicles) was also a key driver of this improvement. Exports proved to be the saviour for the industry during the immediate post-lockdown period.

As per SIAM, the sale of Passenger Vehicles declined by 2.24 % in April-March 2021 over the same period last year. Within the Passenger Vehicles, the sales of Passenger Cars and Vans declined by 9.06% and 17.62 % respectively, while sales of Utility Vehicles marginally increased by 12.13 % in April- March 2021 over the same period last year.

The overall Commercial Vehicles segment registered a degrowth of 20.77 % in April- March 2021 as compared to the same period last year. While the sale of Three-Wheelers declined by 66.06 % in April-March 2021, the Two-Wheelers sales registered a de-growth of 13.19 % in April-March 2021 compared Y-o-Y.

5. AUTOMOBILE PRODUCTION TRENDS

8. SOME OF THE RECENT INITIATIVES TAKEN BY THE GOVERNMENT OF INDIA ARE -

India is at a crucial junction now, positioned well to seize Chinas throne as the "top investment destination" and "the most preferred manufacturing hub of automobiles" as the global sentiment for Chinas governance has gone south in the last one year, which repelled a large number of manufacturers and investors alike to find new areas worth exploring.

To further support its worldwide standing, the GoI announced the Production Linked Incentive (PLI) scheme for automobiles and auto components both, with a maximum incentive of about Rs. 57,000 Crore over a course of 5 years. The scheme covers 4 sub-schemes:

1. Global Sourcing Scheme

2. Vehicle Champion Scheme

3. Component Champion Scheme

4. Production- Linked Incentive (PLI) Scheme

PLI scheme is expected to deliver benefits to a few select firms that would meet the eligibility criteria laid under the scheme. However, the real benefits are expected to penetrate inside the automobile value chain and make an impact at each level. The PLI scheme for automobile sector is expected to act as a growth enabler to make the sector cost- competitive, increase market share, attract investments, promote R&D, local value addition, and creating jobs, in turn, repackaging itself as a Global Champion for both Domestic and Global markets, and build on the Governments initiative of "Atmanirbhar Bharat".

9. AUTOMOBILE COMPONENTS INDUSTRY

The Indian auto-components industry has experienced healthy growth over the last few years. The auto-components industry expanded by a CAGR of 6% over FY16 to FY20 to reach US$ 49.3 billion in FY20. The industry is expected to reach US$ 200 billion by FY26. Due to high development prospects in all segments of the vehicle industry, the auto component sector is expected to rise by double digits in FY22. Auto-components industry account for 2.3% of Indias Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly. A stable government framework, increased purchasing power, large domestic market, and an ever-increasing development in infrastructure have made India a favourable destination for investment.

The industry can be broadly classified into organised and unorganised sectors. The organised sector caters to original equipment manufacturers (OEMs) and consist of high-value precision instruments while the unorganised sector comprises low-valued products and caters mostly to the aftermarket category.

Automobile component industrys revenue stood at US$ 49.3 billion in FY20, up from US$ 39.05 billion in FY16 and is expected to reach US$ 200 billion by FY26. Export of auto components grew at a CAGR of 7.6% to reach Rs. 102,623 crore (US$ 14.5 billion) during the same time. As per Automobile Component Manufacturers Association (ACMA), automobile components export from India is expected to reach US$ 80 billion by 2026. The Indian auto components industry is expected to reach US$ 200 billion in revenue by 2026.

The Foreign Direct Investment (FDI) inflow into Indian automotive* industry during the period April 2000-March 2021 stood at US$ 25.85 billion as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT). Some of the recent investments made/planned in the Indian auto components sector is as follows:

• In June 2021, the government was planning to notify the PLI scheme for auto components.

• In May 2021, the Government of India approved a PLI scheme for manufacturing advanced chemistry cell battery at an estimated outlay of Rs. 18,100 crore (US$ 247.3 million).

• In March 2021, the government announced to offer fresh incentives to companies making electric vehicles (EVs) as part of a broad auto sector scheme. The scheme is expected to attract US$ 14 billion of investment in the next five years.

• In February 2021, Vedanta Resources launched its newest product—aluminium cylinder head alloy, a crucial raw material for manufacturing cylinder heads and other automotive components.

• A cumulative investment of ~Rs. 12.5 trillion (US$ 180 billion) in vehicle production and charging infrastructure would be required until 2030 to meet Indias electric vehicle (EV) ambitions. This is likely to boost the demand of auto components from local manufacturers.

• In January 2021, Suzuki Motor Corp. and Hyundai Motor Co. announced plans to explore ways to make India a key global hub for sourcing components and facilitate sharp rise in vehicle exports from the country.

• In January 2021, French battery system supplier Forsee Power committed to invest Rs. 82 crore (US$ 11.18 million) in phase 1 of the India project.

• In October 2020, Japan Bank for International Cooperation (JBIC) agreed to provide US$ 1 billion (Rs. 7,400 crore) to SBI (State Bank of India) for funding the manufacturing and sales business of suppliers and dealers of Japanese automobile manufacturers as well as providing auto loans for the purchase of Japanese automobiles in India.

• In October 2020, the government of Tamil Nadu signed 14 memorandum of understandings (MoU) worth Rs. 10,055 crore (US$ 1.4 billion) that will generate 69,712 jobs in the state.

• In September 2020, off-highway tyre-maker Alliance Tire Group (ATG), owned by the Japanese major Yokohama Group, announced plans to set up its third plant in the country in Visakhapatnam, with an investment of US$ 165 million (Rs. 1,240 crore). The proposed plant will add over 20,000 tonnes per annum (55 tonnes per day rubber weight) capacity to the 2.3-lakh-tonne annual production from two India plants and will be commissioned by the first quarter of 2023.

• In September 2020, Toyota Kirloskar Motors announced investments of Rs. 2,000+ (US$ 272.81 million) aimed towards electric components and technology.

• In February 2020, National Engineering Industries Ltd (NEIL) announced investment of Rs. 100 crore (US$ 14.31 million) over the next three years for producing needle roller bearing at its Jaipur facility.

• In January 2020, Tata AutoComp Systems entered a joint venture (JV) with Beijing-based Prestolite Electric to enter the electric vehicle (EV) components market.

Following are Governments achievements in the past four years:

• Production of two wheelers, passenger vehicles, commercial vehicles and three wheelers reached 21.03 million, 3.43 million, 0.75 million, and 1.13 million, respectively, in FY20.

• FAME - India Scheme formulated by Department of Heavy Industry, led to a continuous increase in registered OEMs and vehicle models. Also, the scheme enhanced the sales of EVs and about 261,507 electric/hybrid vehicles were supported under the scheme up to December 6, 2018. In February 2019, the Government approved FAME-II scheme with a fund requirement of Rs. 10,000 crore (US$ 1.39 billion) for FY20-22.

• Under National Automotive Testing and research and development (R&D) Infrastructure Project (NATRiP), various facilities including passive safety labs comprising of crash core facility and crash instrumentations including dummies were established at ICAT-Manesar and ARAI-Pune.

• To give a fresh thrust to E-mobility in public transport, Department of Heavy Industry announced the launch of public and shared mobility based on electric powertrain.

The rapidly globalising world is opening newer opportunities for the transportation industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe, and reliable mode of transportation. Over the next decade, this will lead to newer verticals and opportunities for auto-component manufacturers, who would need to adapt change via systematic R&D.

As per ACMA forecasts, automobile component export from India is expected to reach US$ 80 billion by 2026. With shift in global supply chains, the Indian global automotive component trade is likely to expand at ~4-5% by 2026.

In December 2020, Power PSU JV EESL announced plan to install ~500 electric vehicle (EV) charging stations in the country in fiscal 2020-21. As of March 2021, there were 1,800 charging stations and this is expected to reach 4 lakh by 2026.

The Indian auto-components industry is set to become the third largest in the world by 2025. Indian auto-component makers are well positioned to benefit from the globalisation of the sector as export potential could be increased by up to US$ 30 billion by 2021E.

SWOT ANALYSIS

A. Strengths	B. Weaknesses
Geographical spread of operations in India allows proximity to a large and diversified customer base.	Automotive operations are directly dependent on general economic conditions across key global markets.
LargestIroncastingplayerinthecountrywithcapabilitytopr oducefivegradesofironcastings	Signs of melting demand for Automotives in America, South Africa, Eastern Europe etc.
One of the best metallurgical laboratory in India with key machines such as spectrometer, microscope with image analyzer, storohlinappartus/ Ferro excel lab & precision sand testing equipment.	Prices and availability of raw materials like steel, nonferrous alloys, precious metals, and petroleum products are dependent on various environmental factors and any unforeseen or sudden spike in the cost of these items could impact profitability.
Proximity to all major OEMs coupled with consistent track record of deliveries manifested by their increased levels of localization in India.	The liquidity continues to remain under stress coupled with availability of fresh working capital funds being a major challenge has led to low capacity utilizations thereby impacting profitability.
State of art, in-house tool design and 3D modeling/ simulation software with key machines such as CNC, VMC etc.	High cost of production.
One of the few Indian companies in India having high pressure automatic molding lines in both horizontal and vertical technologies.
Trusted partner and strategic Tier I supplier to leading OEMs. It has well established strategic relationships most OEMs across the country and abroad.
Wellpositionedtocatertogrowingdemandofautomobileind ustryinIndiacoupledwithalargeScaleofoperations allowing economies of scale.
Dedicated R&D team focused on development &acquisition of new technologies relevant for future product portfolio.
Skilled, experienced and diversified workforce with proven credentials.
C. Threats	D. Opportunities
Political instability, wars, terrorism, multinational conflicts, natural disasters, fuel shortages and their prices all present business risk.	Strong economic growth in India and other growth markets like China, Southeast Asia and North Africa - resultant demand for Automobiles.
Due to global integration of automobile supply chains the industry has become highly competitive with OEMs continuously scanning the market for lower prices and better terms.	Indian Governments focus on improving ease of doing business with its "Make in India" initiative to transform India into a global manufacturing hub.
Iron Scrap being one of the main Raw Material is sourced from scrap dealers which operate in an unorganized sector	GOIs emphasis on substitution of imported goods sectors such as railways and defense are expected to turn towards
giving rise to uncertainties.	Indian Companies for procurement.
Changing technologies have led to shortening of life cycles of new vehicles.	Diversification towards forward integration.
Imposition of additional taxes and levies designed to limit use of automobiles could adversely affect demand.	The 7th Pay Commission may act as a multiplier of demand for the Automotive sector.
Presence of large number of players in the automobile industry has resulted in extensive competition thus enhancing scope for eating into share of business of other players.	Strategic alliances and partnering could be as mart strategy resulting in specialized capabilities differential offerings.
General law and order problems.

10. STRATEGY AND OUTLOOK

The Indian automotive sector has the potential to generate up to US$300 billion in annual revenue by 2026, create 65 million additional jobs and contribute over 13% to Indias GDP. Increased urbanization is firmly placed in the centre of this progress. As per World Bank study, by 2031, some 600 million people are expected to live in Indias cities. Therefore, automakers are slated to be one of the greatest contributors to this futuristic plan of 100 smart cities by 2020. The Company has recently supplied Hybrid electric buses, which runs both on diesel and electric, and is economically viable, safe and environment-friendly.

A revival of the economy post-demonetization and implementation of GST are putting the country back on track. The Company is looking to be the major beneficiary for the increased infrastructure spending on roads, airports and expected high GDP. In Passenger vehicle, there has been a shift in the trend of buying from small passenger vehicles towards Utility Vehicles (UV). This shift will eat more profitable growth for the Automobile sector. The passenger vehicle sector is expected to grow at 8%-10% in Fiscal 2019.

To achieve this potential, the automotive components industry will need to attract $80-100 billion worth of investments and ensure skill development of the existing talent pool. By 2026, the Indian auto components industry could mature into being the ‘frugal innovator for the world and propel the ‘Make in India movement into ‘Quality in India, and witness many global MNC component suppliers ‘manufacturing in India for the world. The Indian automotive industry is showing positive signs with moderate growth in the passenger vehicle and two-wheeler segments. During the year, OEMs launched new models with additional functionalities and features to attract customers.

> Government Initiatives:-

The Government of Indias Automotive Mission Plan (AMP) 2006-2016 has come a long way in ensuring growth for the sector. Indian Automobile industry is expected to achieve a turnover of US$ 300 billion by 2026 and will grow at a CAGR of 15% from its current revenue of US$ 74 billion.

In November 2020, the Union Cabinet approved PLI scheme in automobile and auto components with an approved financial outlay over a five-year period of Rs. 57,042 crore (US$ 8.1 billion)

Government has come out with Automotive Mission Plan (AMP) 2016-26 which will help the automotive industry to grow and will benefit Indian economy in the following ways: -

> Contribution of auto industry in the countrys GDP will rise to over 12%.

> Around 65 million incremental number of direct and indirect jobs will be created.

> End of life Policy will be implemented for old vehicles.

Road Ahead: -

The rapidly globalising world is opening newer opportunities for the transportation industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe, and reliable mode of transportation. Over the next decade, this will lead to newer verticals and opportunities for auto-component manufacturers, who would need to adapt change via systematic R&D.

CTL - Way Forward: -

CTL aim to be equipped for adapting to the changing scenario of the industry. We strive to enhance our core business by aligning with the changing demands of our customers, most of them being market leaders in the respective industry segments. We continue to adapt and structure our business in a way so as to be able to capitalise on growth opportunities from other future growth areas, with an aim at diversifying our end use segment and customer base. We cater to commercial vehicles, construction and off-road machinery; agricultural and farm machines as well as oilfield equipment and services sectors.

CTL plans to invest in low cost automation for better efficiency, consistency and output in manual processes and copuled with value addition to casting products by performing painting, pre-machining, full machining and assembly, as per customer requirements shall improve revenues an profitability. The Company shall endeavour to add and move towards high end, critical and high value and special alloy products i.e., turbine and bearing housings, case differentials, cylinder blocks and heads

11. CASTEX CAPABILITIES AND ACHIEVEMENTS

Indias largest Iron Casting player, CTL has witnessed the steady change in technology especially in the ferrous casting process and kept pace with ever increasing demand for better quality iron castings by OEMs with latest equipment and technology. CTLs key technological capabilities are:

> Highly automated casting operations with automatic pouring system and semi-automatic core shooter.

> Capability to produce 5 grades of iron castings.

> State of art, in-house tool design and 3D modeling/ simulation software with key machines such as CNC, VMC etc.

> High pressure automatic moulding lines in both horizontal and vertical technologies. It is one of the few Indian companies to have these latest machines

> Semi-automated core shop and fettling shop

> Medium frequency Induction furnaces from leading equipment manufacturers such as Induct other demand ABB

> One of the best metallurgical laboratory in India with key machines such as spectrometer, microscope with image analyser, storohlinappartus/ ferro excellab & precisions and testing equipment

> Oneofthebestdesignanddieshopalongwithautomatedmouldingandcasinglines.

> Thin walled capability for cylinder blocks and heads.

> One of the largest and best flywheel casting facilities in India.

> Turbo Charger Housing. Capability to mould on high speed vertical casting lines yielding better yield and weight reduction benefits.

> Transmission and differential housings are ductile iron parts which need special casting facilities present with us.

12. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal controls in place. It has documented policies and procedures covering all financial and operating functions. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls for ensuring reliability of financial reporting, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations. The Company has continued its efforts to align all its processes and controls with global best practices.

Some significant features of the internal control of systems are:

> The Audit Committee/ Resolution Professional, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with accounting standards as well as reasons for changes in accounting policies and practices, if any;

> Documentation of major business processes and testing thereof including financial closing, computer controls and entity level controls, as part of compliance program;

> State-of-the-art Enterprise Resource Planning, supplier relations management and customer relations management connect the Companys different locations, dealers and vendors for efficient and seamless information exchange. The Company also maintains a comprehensive information security policy and undertakes continuous upgrades to its IT systems;

> Detailed business plans for each segment, investment strategies, year-on-year reviews, annual financial and operating plans and monthly monitoring are part of the established practices for all operating and service functions;

> A well-established, independent, multi-disciplinary Internal Audit team operates in line with governance best practices. It reviews and reports to management and the Audit Committee about compliance with internal controls and the efficiency and effectiveness of operations as well as the key process risks. The scope and authority of the Internal Audit division is derived from the Audit Charter, duly approved by the Audit Committee; and Anti-fraud programmes including whistleblower mechanisms are operative across the Company.

The Board/Resolution Professional takes responsibility for the overall process of risk management throughout the organization. Through an Enterprise Risk Management programme, the Companys business units and corporate functions address opportunities and the attendant risks through an institutionalized approach aligned to the Companys objectives. This is also facilitated by internal audit. The Business risk is managed through cross functional involvement and communication across businesses. The results of the risk assessment and residual risks are presented to the senior management. The Audit Committee reviews business risk are as covering operational, financial, Strategic and regulatory risks.

13. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

CTLs performance in the last fiscal year is a reflection of the challenges faced by the automotive industry in India and certain other regions internationally. In the financial year ending 31st March, 2021, the consolidated revenues of the Company were at Rs. 2935.27 millions.

The Consolidated EBITDA, before exceptional items, for the financial year ended 31st March, 2021 stood at (Rs. 522.18) millions at a margin of (17.79%) percent. The management, during this period, remained focused on cost optimization and value enhancement.

The consolidated loss after tax for the FY21 before minority interest and associate income was Rs. 5492.64 millions

(Corporate Insolvency Resolution Process was initiated against Castex Technologies Limited under the Insolvency and Bankruptcy Code 2016. Its Affairs, business and assets are being managed by the Interim Resolution Professional, Mr. Dinkar T. Vekatasubaramanian, appointed by the National Company Law Tribunal vide order dated 20th December, 2017, w.e.f., 22nd December, 2017 and continued as Resolution Professional by the Committee of Creditors in its meeting held on 12th January, 2018. Further Mr. Dinkar T. Venkatasubramanian appointed as Insolvency Professional under the directions of Implementation and Monitoring Committee of the Corporate Debtor, as per the Resolution Plan approved by Honble National Company Law Tribunal by order dated 15th December 2020 under the provisions of the Code).

14. FINANCIAL CONDITION

CTL monitors its financial position regularly and optimises its cash resources through a robust cash management system. However, despite this the Company is experiencing a stress on the cash flows with the result that during the financial year 2020-21, your Company has been unable to meet all its debt obligations.

15. DEBT POSITION

As of March 31, 2021 the Group had consolidated debt of Rs. 75030.402 million comprising Rs. 0 million of long term debt and Rs. 75030.402 of short term borrowings. Cash and equivalents stood at Rs. 44.34 million, translating into net debt of Rs. 74986.062 million.

16. HUMAN RESOURCES

Human Resource is the most vital factor to achieve the goals of any organization. our companys human resource policy provides an environment that motivates its employees to realize their full potential. Your Company respects each employee, motivates them and try to offer opportunities based on the skill sets and in this process builds mutually benefiting relations between the Company and its employees.

Your company has put in place a policy that not only increases productivity but also increases job satisfaction of its employees. Your company has placed a recruitment system in the organization wherein a right candidate with right skills is recruited for a position. Your company has established systems, which aims to provide training to employees at every level of the organization that leads to quality work output in their assigned work in turn helping in improving the bottom- line of your company.

17. STATUTORY COMPLIANCET

The Company Secretary ensures compliance with the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to the extent they are applicable and compliance with the guidelines on insider trading for prevention of the same.

On Commencement of Corporate Insolvency Resolution Process (CIRP), the Role and Responsibilities of Board shall be fulfilled by Resolution Professional/Insolvency Professional and powers of the Board of Directors/Committees stand suspended as amended vide the SEBI (LODR) (Third Amendment) 2018 dated 31^st May 2018 read with the NCLT order dated 15^th December 2020

18. CAUTION STATEMENT

The above mentioned statements are only ‘forward looking statements based on certain assumptions and expectations. The Companys actual performance could differ materially from those expressed/projected depending upon changes in various factors. The Company does not assume any responsibility to any change(s) in forward looking statements , on the basis of subsequent developments, information or events etc. Data, figures and statements are from publicly shared reports and opinions of experts and Automotive and Auto-component associations and organisations.

Important developments that could affect the Companys operations include a downward trend in the domestic automotive industry, competition, rise in input costs, exchange rate fluctuations, and significant changes in the political and economic environment in India, environmental standards, tax laws, litigation and labour relations.

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS

[Pursuant to Regulation 34(3) read with Schedule V Para C clause (10)(i) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015]

To,

The Members of

Castex Technologies Limited

(CIN: L65921HR1983PLC033789)

Vill. Narsinghpur, Mohammadpur, Old Manesar Road Gurgaon Haryana-122001 India.

The Company i.e., Castex Technologies Limited is admitted into Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code 2016 ("Code") vide the National Company Law Tribunal, Chandigarh Bench order dated 20th December, 2017. Its affairs, business and assets are being managed by Mr. Dinkar T. Venkatasubramanian, appointed as Interim Resolution Professional (IRP) by the National Company Law Tribunal by order dated 20th December, 2017 w.e.f., 22nd December, 2017 and continued as Resolution Professional by the Committee of Creditors in its meeting held on 12th January, 2018 Further the Resolution Plan submitted by successful Resolution Applicant for the company has been approved by the honble NCLT vide order dated December 15, 2020,. In terms of the Approved Resolution Plan an Implementation and Monitoring Committee comprising 3 lenders of Castex Technologies, Insolvency Professional (the erstwhile Resolution Professional) and the successful Resolution Applicant was formed to oversee the implementation of the Approved Resolution plan and manage the affairs of the Corporate Debtor till such implementation.

Accordingly, the roles and responsibilities of the Board of Directors/Committees of the company after the commencement of CIRP under the Insolvency and Bankruptcy Code, 2016 ("Code") shall be fulfilled by Resolution Professional in accordance with section 17 and 23 of the code and power of the Board/ Committee stand suspended as amended vide the SEBI (Listing Obligation and Disclosure Requirements) (Third Amendment) Regulation, 2018 dated 31st May, 2018.

I/We have examined the relevant registers, records, forms, returns and disclosures received from the Directors of Castex Technologies Limited ( CIN L65921HR1983PLC033789 ) having registered office at Vill.Narsinghpur, Mohammadpur, Old Manesar Road Gurgaon HR 122001 IN (hereinafter referred to as "CTL" or ‘the Company), produced before me/us by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C Sub clause 10(i) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In my opinion and to the best of my information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to me by the Company & its officers, I/we hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ending on 31st March, 2021 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority except Mr. Sanjay Arora (DIN: 07757118) who has been debarred/ disqualified by Registrar of Companies due to Non-Filing of DIR-3KYC.

Sr. No. Name of Director	DIN	Date of appointment in Company
1. YOGESH KAPUR	00014385	25/08/2017
2. ARVIND DHAM	00047217	30/01/1995
3. SANJAY CHHABRA	01237026	13/08/2013
4. BRAJINDAR MOHAN SINGH	02143830	25/08/2017
5. SANJAY ARORA	07757118	27/03/2017
6. ANURADHA KAPUR**	01646928	25/08/2017

Ensuring the eligibility of for the appointment / continuity of every Director on the Board is the responsibility of the management of the Company. Our responsibility is to express an opinion on these based on our verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

**Ms. Anuradha Kapur has tendered her resignation from the post of the Director of the Company w.e.f., 14th October, 2019 and also filed respective DIR-11 form with the Registrar of Companies

	For Mukul Dusad and Associates
Place: Jaipur
Date: 23/08/2021	Sd/-
	CS Mukul Dusad
	Practicing Company Secretary
	M.No. 60067
	COP No.: 22589
	UDIN: A060067C000819144